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 4-week retail month of April, which started on Monday, April 4, and ended on Sunday, May 1. This period is compared to the 4 weeks that began last year on Monday, April 5, and ended on Sunday, May 2. 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 April came in at $17.33 billion, an increase of 13.9% from $15.21 billion last year. This year's 4-week April reporting month had one fewer shopping day versus last year due to the calendar shift of Easter and most of our warehouses not being opened Easter Sunday. This negatively impacted total and comparable sales by approximately 2% to 2.5%. Comparable sales were as follows: On a reported basis, in the U.S., the 4 weeks is at 13.8%, 35 weeks, 15.8%. Canada, 4 weeks was at 16.0%, 35 weeks, 16.0%. Other International, the 4 weeks was at 2.6%, 35 weeks, 8.4%. Total company, the 4 weeks was at 12.6%, 35 weeks, 14.8%. E-commerce, the 4 weeks was a 5.7%; 35 weeks, 11.7%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: In the U.S., the 4 weeks was an 8.1%, 35 weeks, 10.7%; Canada, 13.7% for the 4 weeks, 35 weeks was at 10.9%. Other International for the 4 weeks is 7.6%, 35 weeks, 9.5%. Total company for the 4 weeks was an 8.7% and 35 weeks, 10.6%. E-commerce for the 4 weeks, 6.2%; and 11.5% for the 35 weeks. Our comp traffic or frequency for April was up 4.9% worldwide and 3.6% in the U.S., which includes the negative 2% to 2.5% impact from the Easter shift. Foreign currencies year-over-year relative to the U.S. dollar negatively impacted total and comparable sales as follows: Canada by approximately 1.3%; Other International by approximately 7.7% and total company by approximately 1.2%. Gasoline price inflation positively impacted total reported comp sales by approximately 5.0%. The average worldwide selling price per gallon was 43% higher versus last year. Worldwide, the average transaction for April was up 7.3%, 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 San Diego, Texas and the Midwest. Other International and local currencies, we saw the strongest results in Mexico, Taiwan and the U.K. Overall, inflation in April was consistent with what we saw in February and March. Moving to the merchandise highlights. The following comparable sales results by category for the month exclude the impact of foreign exchange. Food and sundries were positive in the high single digits. Candy, deli and sundries were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included bakery and service deli. Nonfoods were positive mid-single digits. Better-performing departments included toys and seasonal, home furnishing and tires. Ancillary business sales were up low 40s. Gas, food court and travel were the top performers. Looking ahead, we will release our Q3 fiscal '22 earnings on Thursday, May 26. Earnings will be announced after market close with a conference call to follow at 2:00 p.m. Pacific Time. The call can be streamed live via our Investor Relations website. The May sales reporting period began May 2 and ends May 29 compared to the 4 weeks that began last May 3 and ended May 30, 2021. May sales will be announced Thursday, June 6 at 1:15 p.m. Pacific Time. If you have any questions regarding our April sales results or any other Investor Relations questions, please call Bob Nelson at (425) 313-8255; Josh Dahman at (425) 313-8254; or myself, David Sherwood at (425) 313-8239. This recording will be available until 5:00 p.m. Pacific Time, Wednesday, May 11. Thanks for calling. Have a great day.