Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello, and thank you for calling Costco Wholesale Corporation. I'm Josh Dahmen, Director of Finance and Investor Relations, and I will review our sales results for the 4-week retail month of January, which started on Monday, January 3, and ended on Sunday, January 30. This period is compared to the 4 weeks that began last year on Monday, January 4, and ended on Sunday, January 31. 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 January came in at $15.76 billion, an increase of 15.5% from $13.64 billion last year. Lunar and Chinese New Year occurred on February 1, 11 days earlier this year. The shift favorably impacted January's other international and total company sales by approximately 4% and 0.5%, respectively. Comparable sales were as follows reported. For the U.S., 4 weeks, 14.1%; 22 weeks, 15.2%. For Canada, the 4 weeks, 17.8%, 22 weeks, 16.9%. For other international for 4 weeks, 11.8%, 22 weeks, 11.1% for Total company before weeks, 14.2%, 22 weeks, 14.8%. E-comm for the 4 weeks, 9.0%, 22 weeks, 13.6%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: In the U.S., for the 4 weeks, 9.5%; 22 weeks, 10.4% for Canada, the 4 weeks, 13.9%, 22 weeks, 10.4%. Other International for the 4 weeks, 14.6%; 22 weeks, 11.3%. For total company, the 4 weeks, 10.8%; 22 weeks, 10.5% for E-com to 4 weeks, 9.0%, 22 weeks, 13.1%. Our comp traffic or frequency for January was up 9.4% worldwide and 7.5% in the U.S. Foreign currencies year-over-year relative to the U.S. dollar impacted total and comparable sales as follows: Canada positively by approximately 1.0%, other international negatively by approximately 4.9% and total company negatively by approximately 0.6%. Gasoline price inflation positively impacted total reported comp sales by approximately 4.0%. The average worldwide selling price per gallon was 42% higher this year. Worldwide, the average transaction for January was up 4.5%, which included the benefit from gasoline inflation and the negative impact from FX. In terms of regional and merchandising categories, the general highlights were as follows: U.S. regions with the strongest comparable sales were L.A., Texas and the Southeast. Other International in local currencies, we saw the strongest results in Taiwan, Korea and Australia. Inflation in January was consistent with what we saw in December. Moving to merchandise highlights. The following comparable sales results by category for the month exclude the impact of foreign exchange. Foods and sundries were positive high single digits, sundries, frozen food and candy were the strongest apartments. Fresh foods were up low double digits. Better-performing departments included service deli and bakery, Nonfoods were positive high single digits. Better-performing departments included tire shops, health and beauty aids, lawn and garden and apparel. Ancillary business sales were of mid-40s, gas, food court and pharmacy were the top performers. Looking ahead, the February sales reporting period began January 31, and end February 27 compared to the 4 weeks that began last February 1, and ended February 28, 2021. The February sales will be announced in conjunction with our Q2 quarterly results, Thursday, March 3, at 1:15 p.m. Pacific Time. A discussion on both Q2 earnings and February sales will occur at 2:00 p.m. Pacific Time on the 3rd. If you have any questions regarding our January sales results or any other Investor Relations questions, please call Bob Nelson at (425) 313-8255; David Sherwood at (425) 313-8239; or myself, Josh Dahmen at (425) 313-8254. This recording will be available until 5:00 p.m. Pacific Time, Wednesday, February 9. Thanks for calling Costco Wholesale Corporation, and have a great day.