Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

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 September, which started on Monday, August 29, and ended on Sunday, October 2. This period is compared to the 5 weeks that began last year on Monday, August 30, and ended on Sunday, October 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 September came in at $21.46 billion, an increase of 10.1% from $19.50 billion last year. Comparable sales were as follows. On a reported basis, the 5 weeks in the U.S. was at 11.2%; Canada 5.7%; Other International, negative 1.9%; Total Company, 8.5%; E-commerce, 0.7%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: for the 5 weeks in the U.S. was an 8.0%; Canada, 9.6%; Other International, 11.0%; Total Company 8.6%; and E-commerce, 2.3%. Our comp traffic or frequency for September was up 4.7% worldwide and 2.6% in the U.S. There was a slight negative impact to traffic from Hurricane Ian and no material impact for the month for the shift of the Chuseok Moon Festival holiday. Foreign currencies year-over-year relative to the U.S. dollar negatively impacted total and comparable sales as follows: Canada by approximately 5.3%; Other International by approximately 14.7%; and Total Company by approximately 2.8%. Gasoline price inflation positively impacted total reported comp sales by approximately 2.7%. The average worldwide selling price per gallon was 21% higher versus last year. Worldwide, the average transaction was up 3.7%, 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 the Midwest, Northwest and San Diego. Other International and local currencies, we saw the strongest results in Australia, Spain, U.K. and Mexico. Inflation in food and sundries was consistent with August, while inflation for fresh was lower year-over-year when compared to August. Moving to 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, candy and frozen foods were the strongest departments. Fresh foods were up mid- to high single digits. Better-performing departments included bakery and produce. Nonfoods increased mid-single digits. Better-performing departments included toys and seasonal, tires, home furnishings, and health and beauty aids. Ancillary business sales were up low 20s. Gas and food court were the top performers. Looking ahead, the October reporting period will include the 4 weeks beginning October 3 and ending October 30 compared to the 4 weeks beginning October 4 and ending October 31, 2021. October sales will be announced Wednesday, November 2, at 1:15 p.m. Pacific Time. If you have any questions regarding our September sales results or any other Investor Relations questions, please call Bob Nelson at (425) 313-8255, Josh Daman 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, October 12. Thanks for calling, and have a great day.