Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

[Audio Gap] 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 5-week retail month of December, which started on Monday, November 28 and ended on Sunday, January 1. This period is compared to the 5 weeks that began last year on Monday, November 29 and ended on Sunday, January 2. 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 December came in at $23.80 billion, an increase of 7% from $22.24 billion last year. Comparable sales were as follows: in the U.S., for the 5 weeks, 6.2%; for the 18 weeks, 8.1%; in Canada, for the 5 weeks, 4.7%; 18 weeks, 3.1%; Other International, for the 5 weeks, 2.5%; for the 18 weeks, negative 1.1%; total company, for the 5 weeks, 5.5%; for the 18 weeks, 6.1%; e-comm, for the 5 weeks, negative 6.4%; and for the 18 weeks, negative 4.8%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: U.S., for the 5 weeks, 6.4%; for the 18 weeks, 6.3%; Canada, for the 5 weeks, 10.9%; for the 18 weeks, 9.1%; Other International, for the 5 weeks, 9.1%; and for the 18 weeks, 9.1%; total company, for the 5 weeks, 7.3%; and for the 18 weeks, 7.1%; e-comm, for the 5 weeks, negative 5.4%; and for the 18 weeks negative 3.4%. Our comp traffic or frequency for December was up 4.6% worldwide and 3.6% 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 6.5%, Other International by approximately 7.7% and total company by approximately 2.0%. The impact of gas price inflation on comps was slightly positive. The average worldwide selling price per gallon was up approximately 1% versus last year. Worldwide, the average transaction was up about 1%, which included the negative impact from FX and the slight 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 with the Northeast, Midwest and Southeast. Other International and local currencies, we saw the strongest results in Spain, U.K. and Mexico. Year-over-year inflation in both food and sundries and fresh were down slightly from November. 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 teens. Cooler, sundries and food were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included bakery and produce. Nonfoods was slightly positive. Better-performing departments included tires, sporting goods, apparel and health and beauty. Underperforming departments were majors, primarily consumer electronics, housewares and domestics. Ancillary business sales were up mid- to high single digits. Food court, optical and pharmacy were the top performers. Looking ahead, the January reporting period will include the 4 weeks beginning January 2 and ending January 29 compared to the 4 weeks beginning January 3 and ending January 30, 2022. January sales will be announced Wednesday, February 1 at 1:15 p.m. Pacific Time. If you have any questions regarding our December sales results or any other Investor Relations questions, please call 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, Thursday, January 12. Thanks for calling Costco, and have a great day.