Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello and thank you for calling Costco Wholesale Corporation. I'm David Sherwood, VP of Finance and Investor Relations, and I will review our sales results for the 4-week retail month of October, which started on Monday, October 3, and ended on Sunday, October 30. This period is compared to the 4 weeks that began last year on Monday, October 4, and ended on Sunday, October 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 October came in at $17.73 billion, an increase of 7.7% from $16.47 billion last year. Comparable sales were as follows: On a reported basis, in the U.S., the 4 weeks is at 9.2%; for the 9 weeks, 10.3%. Canada, the 4 weeks is at 0.5%; 9 weeks, 3.3%. Other International, the 4 weeks is at negative 5.4% and the 9 weeks is a negative 3.5%. Total company, the 4 weeks is at 6.0%; 9 weeks, 7.4%. And e-commerce, negative 0.7%; and the 9 weeks, 0.3%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: In the U.S., the 4 weeks is at 6.1%; the 9 weeks, 7.1%. Canada, the 4 weeks is at 8.8%; and the 9 weeks, 9.2%. Other International, the 4 weeks is at 7.9%; 9 weeks, 9.5%. Total company, the 4 weeks is a 6.7%; and 9 weeks, 7.7%. And e-commerce, the 4 weeks is at 1.6%; and the 9 weeks, 2.2%. Our comp traffic or frequency for October was up 3.5% worldwide and 1.7% 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 10%, Other International by approximately 15% and Total Company by approximately 3.5%. Gasoline price inflation positively impacted total reported comp sales by approximately 2.8%. The average worldwide selling price per gallon was [ 22% ] higher versus last year. Worldwide, the average transaction was up 2.5%, 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 the Midwest, Bay Area and Northwest. Other International and local currencies, we saw the strongest results in Spain, Mexico, U.K. and Australia. Inflation in food and sundries was consistent with September, while inflation for fresh was lower year-over-year when compared to September. Moving on to merchandise highlights. The following comparable sales results by category for the month excluded the negative impact of foreign exchange. Food and sundries were positive in the low double digits. Cooler, candy and sundries were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included bakery and produce. Nonfoods increased low single digits. Better-performing departments included automotive, tires, housewares and health and beauty aids. Ancillary business sales were up low 20s. Gas and food court were the top performers. Looking ahead, the November reporting period will include the 4 weeks beginning October 31 and ending November 27 compared to the 4 weeks, which began November 1 and ended November 28, 2021. And November sales will be announced Wednesday, November 30 at 1:15 p.m. Pacific Time. If you have any questions regarding our October 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 p.m. Pacific Time, Wednesday, November 9. Thanks for calling Costco, and have a great day.