Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello, and thank you for calling Costco Wholesale Corporation. I'm David Sherwood, AVP of Finance and Investor Relations, and I will review our sales results for the 5-week retail month of December, which started on Monday, November 29, and ended on Sunday, January 2. This period is compared to the 5 weeks that began last year on Monday, November 30, and ended on Sunday, January 3. This call will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause actual events, results and/or performance to differ materially from those indicated by such statements. The risks and uncertainties include, but are not limited to, those outlined in today's call and sales release as well as other risks identified from time to time in the company's public statements and reports filed with the SEC. Forward-looking statements speak only as of the date they are made, and the company does not undertake to update them, except as required by law. As reported in our release, net sales for December came in at $22.24 billion, an increase of 16.2% from $19.14 billion last year. Comparable sales were as follows: On a reported basis, in the U.S., the 5 weeks is up 15.9%, 18 weeks 15.4%; in Canada, the 5 weeks was up 16.5%, 18 weeks 16.7%; Other International, the 5 weeks was up 6.4%, 18 weeks 11.0%; total company, the 5 weeks is up 14.5%, 18 weeks 14.9%; e-commerce, the 5 weeks is up 17.8%, 18 weeks 14.4%. Comparable sales, excluding impacts from changes in gasoline prices and foreign exchange, were as follows: In the U.S., the 5 weeks is 11.5%, 18 weeks 10.5%; in Canada, the 5 weeks was up 13.6%; 18 weeks 9.7%; Other International, the 5 weeks was 9.6% 18 weeks 10.5%. Total company, the 5 weeks is 11.5%, 18 weeks 10.4%; and e-commerce for the 5 weeks is 17.8%, 18 weeks 13.9%. Our comp traffic or frequency for December was up 9.8% worldwide and 8.5% in U.S. Foreign currencies year-over-year relative to the U.S. dollar impacted total and comparable sales as follows: Canada, positively by approximately 0.2%; Other International, negatively by approximately negative 5.1%; and total company, negatively by approximately 0.75%. Gasoline price inflation positively impacted total reported comp sales by approximately 3.8%. The average worldwide sale price per gallon was 47% higher compared to last year. Worldwide, the average transaction for December was up 4.3%, which included the positive impacts from gasoline inflation and FX. In terms of regional and merchandising categories, the general highlights were as follows: U.S. regions with the strongest results were L.A., San Diego and Texas. Other International and local currencies, we saw the strongest results in the U.K., Mexico and Japan. December inflation was relatively consistent with what we saw in November, with the largest impacts in fresh foods and food and sundries. Moving to merchandise highlights. The following comparable sales results by category for the month exclude the positive impacts of foreign exchange. Food and sundries were positive high single digits. Candy, deli and food were the strongest departments. Fresh foods were up low double digits. Better-performing departments include bakery and service deli. Nonfoods were positive low double digits. Better-performing departments included toys and seasonal, tire shop, domestics and jewelry. Ancillary businesses were up mid-40s. Gas, food court and hearing aid were the top performers. Looking ahead, we will host our Annual Shareholders Meeting virtually on January 20 at 2 p.m. Pacific Time. The meeting can be streamed live at www.virtualshareholdermeeting.com/COST2022. The January sales reporting period began January 3 and ends January 30, compared to the 4 weeks that began last January 4 and ended January 31, 2021. January sales will be announced Wednesday, February 2, at 1:15 p.m. Pacific Time. If you have any questions regarding our December sales results or any other Investor Relations questions, please call Bob Nelson at (425) 313-8255; Josh Dahmen at (425) 313-8254; or myself, David Sherwood, at (425) 313-8239. This recording will be available until 5 p.m. Pacific Time, Wednesday, January 12. Thanks for calling. Have a great day.