Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello, and thank you for calling Costco Wholesale Corporation. I'm Josh Dahmen, AVP of Finance and Investor Relations, and I will review our sales results for the 4-week retail month of November, which started on Monday, October 31, and ended on Sunday, November 27. This period is compared to the 4 weeks that began last year on Monday, November 1, and ended on Sunday, November 28. 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 November came in at $19.17 billion, an increase of 5.7% from $18.13 billion last year. Comparable sales were as follows: On a reported basis in the U.S., for the 4 weeks, 6.0%; for the 12 weeks, 9.3%; 13 weeks, 8.8%; in Canada, for the 4 weeks, 1.0%; 12 weeks, 2.4%; 13 weeks, 2.5%. Other International for the 4 weeks, negative 1.0%; 12 weeks, negative 3.1%; 13 weeks, negative 2.7%. Total company, for the 4 weeks, 4.3%; 12 weeks, 6.6%; 13 weeks, 6.4%. E-commerce for the 4 weeks, negative 10.1%; 12 weeks, negative 3.7%; 13 weeks, negative 4.4%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: In the U.S., for the 4 weeks, 4.6%; 12 weeks, 6.5%; 13 weeks, 6.3%. In Canada, for the 4 weeks, 6.6%; 12 weeks, 8.3%; 13 weeks, 8.4%. Other International, for the 4 weeks, 8.3%; 12 weeks, 9.1%; 13 weeks, 9.1%. For total company, 4 weeks, 5.3%; 12 weeks, 7.1%; 13 weeks, 6.9%. And for e-commerce, 4 weeks, negative 8.9%; 12 weeks, negative 2.0%; 13 weeks, negative 2.8%. Our comp traffic or frequency for November was up 3.4% worldwide and 2.4% 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%, Other International by approximately 11%, and total company by approximately 2.5%. Gasoline price inflation positively impacted total reported comp sales by approximately 1.5%. The average worldwide selling price per gallon was 12.5% higher versus last year. Worldwide, the average transaction was up about 1%, which included the negative impact from FX and the benefit from gasoline inflation. 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 Spain, U.K., Australia and Mexico. Inflation in food and sundries was consistent with October, while inflation for fresh was slightly higher year-over-year when compared to October. Moving to merchandise highlights. The following comparable sales results by category for the month excluded the negative impact from foreign exchange. Food and sundries were positive in the low double digits. Cooler, sundries and food were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included bakery and produce. Non-foods decreased low single digits. Better-performing departments included tires, sporting goods, toys and seasonal, and automotive. Underperforming departments were majors, primarily consumer electronics, jewelry and hardware. Ancillary business sales were up mid-teens. Gas and food court were the top performers. Looking ahead, the December reporting period will include the 5 weeks beginning November 28 and ending January 1 compared to the 5 weeks beginning November 29 and ending January 2, 2022. December sales will be announced Thursday, January 5 at 1:15 p.m. Pacific Time. If you have any questions regarding our November sales results or any other Investor Relations questions, please call Bob Nelson at (425) 313-8255; David Sherwood at (425) 313-8239; or myself, Josh Dahmen at (425) 313-8254. This recording will be available until 5 p.m. Pacific Time, Wednesday, December 7. Thanks for calling Costco Wholesale Corporation, and have a great day.