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 May, which started on Monday, May 2, and ended on Sunday, May 29. This period is compared to the 4 weeks that began last year on Monday, May 3, and ended on Sunday, May 30. 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 May came in at $18.23 billion, an increase of 16.9% from $15.59 billion last year. Comparable sales were as follows. On a reported basis, the U.S. for the 4 weeks was at 17.5% for 39 weeks, 16.0%. In Canada, the 4 weeks was at 17.4%, 39 weeks, 16.2%. Other international for the 4 weeks is at 2.6%, 39 weeks, 7.8%. Total company, the 4 weeks was at 15.5%, 39 weeks, 14.9%; and e-commerce, the 4 weeks is at 6.3%, 39 weeks, 11.1%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: In the U.S., the 4 weeks was at 10.7%, 39 weeks, 10.7%. Canada, the 4 weeks is at 19.5%, 39 weeks, 11.9%. Other International, the 4 weeks was at 10.1%, 39 weeks, 9.6%. Total company, 4 weeks is 11.8%, 39 weeks, 10.7%. And e-commerce for the 4 weeks is at 7.7% and the 39 weeks, 11.1%. Our comp traffic or frequency for May was up 7.7% worldwide and 6.1% in the U.S. Foreign currencies year-over-year relative to the U.S. dollar negatively impacted total and comparable sales as follows: Canada by approximately 7.2%, other International by approximately 10.6% and total company by approximately 2.4%. Gasoline price inflation positively impacted total reported comp sales by approximately 6.2%. The average worldwide selling price per gallon was 49% higher versus last year. Worldwide, the average transaction 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 Texas, the Midwest and San Diego. Other international and local currencies, we saw the strongest results in Spain, Australia and Mexico. Overall inflation in May was slightly higher than what we saw in April, primarily related to food and sundries. 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 low double digits, sundries, food and cooler were the strongest departments. Fresh foods were up high single digits. Better performing departments included bakery and produce. Nonfoods were positive low double digits. Better performing departments included toys and seasonal, automotive and Lawn and Garden. Ancillary business sales were up low 50s. Gas and food court were the top performers. Looking ahead, the June sales reporting period began May 30 and end July 3 compared to the 5 weeks that began last May 31 and ended July 4, 2021. This year, June will have 1 extra selling day due to the shift in timing of the July 4 holiday. June Wills will be announced Thursday, July 7, at 1:15 p.m. Pacific time. If you have any questions regarding our May sales results or any other Investor Relations questions, please call Bob Nelson at (425) 313-8255, Josh Damon at (425) 313-8254 or myself, David Sherwood at (425) 313-8239. This recording will be available until 5:00 p.m. Pacific Time, Thursday, June 9. Thanks for calling, and have a great day.