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 August, which started on Monday, August 1, and ended on Sunday, August 28. This period is compared to the 4 weeks that began last year on Monday, August 2, and ended on Sunday, August 29. 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 August came in at $17.55 billion, an increase of 11.4% from $15.75 billion last year. For the 16 weeks ended August 28, net sales came in at $70.8 billion, an increase of 15.3% from $61.4 billion last year. For the 52 weeks ended August 28, net sales came in at $222.7 billion, an increase of 15.9% from $192.1 billion last year. Comparable sales were as follows: On a reported basis, in the U.S., 4 weeks, 11.0%; 16 weeks, 15.8%; 52 weeks, 15.8%. For Canada, the 4 weeks was 11.6%; 16 weeks, 13.4%; and the 52 weeks, 15.2%. Other International, the 4 weeks was at 3.4%; 16 weeks, 2.9%; and the 52 weeks, 6.6%. And total company, the 4 weeks was at 10.1%; 16 weeks, 13.7%; and the 52 weeks, 14.4%. E-commerce, the 4 weeks was at 3.9%; 16 weeks, 7.1%; and 52 weeks, 10.1%. 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 7.6%; 16 weeks, 9.6%; 52 weeks, 10.4%. Canada, the 4 weeks was 11.7%; 16 weeks, 13.7%; and 52 weeks, 12.1%. Other International, 4 weeks was at 12.5%; 16 weeks, 11.3%; and the 52 weeks, 10.2%. Total company, the 4 weeks was -- sorry, 8.7%; 16 weeks, 10.4%; and 52 weeks, 10.6%. E-commerce, the 4 weeks was at 4.8%; 16 weeks, 8.4%; and 52 weeks, 10.4%. Our comp traffic or frequency for August was up 5.6% worldwide and 2.9% 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 2.5%; Other International by approximately 11.5%; and total company by approximately 1.8%. Gasoline price inflation positively impacted total reported comp sales by approximately 3.2%. The average worldwide selling price per gallon was 25% higher versus last year. Worldwide, the average transaction was up 4.3%, 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: The U.S. regions with the strongest comparable sales were the Midwest, Southeast and Northeast; Other International in local currencies, we saw the strongest results in Australia, Spain and U.K.; inflation in food and sundries and fresh were slightly higher from what we saw in June and July. Moving into merchandise highlights. The following comparable sales results by category for the month exclude the negative impact of foreign exchange. Food and sundries were positive in the low double digits. Cooler, frozen foods and candy were the strongest departments. Fresh foods were up high single digits. Better-performing departments included bakery and produce. Nonfood increased low to mid-single digits. Better-performing departments included tires, toys and seasonal, automotive and sporting goods. Ancillary business sales were up mid-20s. Gas and food court were the top performers. Looking ahead, the September reporting period will include the 5 weeks beginning August 29 and ending October 2 compared to the 5 weeks beginning August 30 and ending October 3, 2021. September sales will be announced Wednesday, October 5, at 1:15 p.m. Pacific Time. Prior to September sales, we will be releasing our Q4 and total year fiscal 2022 earnings on September 22. 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. If you have any questions regarding our August 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 5:00 p.m. Pacific Time, Wednesday, September 7. Thanks for calling, and have a great day.