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 January, which started on Monday, January 2, and ended on Sunday, January 29. This period is compared to the 4 weeks that began last year on Monday, January 3, and ended on Sunday, January 30. 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 January came in at $16.84 billion, an increase of 6.9% from $15.76 billion last year. Lunar and Chinese New Year occurred on January 22, 10 days earlier this year. The shift negatively impacted January's Other International and Total Company sales by approximately 2% and 0.25%, respectively. Comparable sales were as follows: the U.S. for the 4 weeks on a reported basis, 6.6%; for the 22 weeks, 7.8%. Canada, the 4 weeks, 2.4%; 22 weeks, 3.0%. Other International for the 4 weeks, 3.9%; 22 weeks, negative 0.2%. Total Company for the 4 weeks, 5.6%; 22 weeks, 6.0%. And e-comm for the 4 weeks, negative 15.4% and for the 22 weeks, negative 6.4%. Comparable sales excluding the impacts from changes in gasoline prices and foreign exchange were as follows: U.S., for the 4 weeks, 6.9%; for the 22 weeks, 6.4%. Canada, for the 4 weeks, 8.9%; 22 weeks, 9.0%. Other International for the 4 weeks, 8.7%; 22 weeks, 9.0%. Total Company for the 4 weeks, 7.4%; 22 weeks, 7.1%. And e-comm for the 4 weeks, negative 14.4% and the 22 weeks, negative 5.0%. Our comp traffic or frequency for January was up 6.2% worldwide, including the negative impact from the holiday shift. Traffic in the U.S. was up 5.1%. Foreign currencies year-over-year relative to the U.S. dollar negatively impacted total and comparable sales as follows: Canada, by approximately 6.7%; Other International, by approximately 5.8% and Total Company, by approximately 1.8%. There was no impact from gas pricing in the month as the average worldwide selling price per gallon was the same year-over-year. Worldwide, the average transaction was down about 0.5%, which included 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 for the Northeast, Midwest and Southeast. Other International in local currencies, we saw the strongest results in Spain, U.K. and Mexico. Year-over-year inflation for food and sundries was down slightly from December, while inflation for fresh was up slightly. Moving to merchandise highlights. The following comparable sales results by category for the month exclude the negative impact from foreign exchange. Food and sundries were positive in the low double digits. Cooler, sundries and candy were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included bakery and produce. Non-foods was negative low single digits. Better-performing departments included apparel, health and beauty and tires. Underperforming departments were toys and seasonal, majors, primarily consumer electronics and jewelry. Ancillary business sales were up high single digits. Food court, optical and hearing aids were the top performers. Looking ahead, the February reporting period will include the 4 weeks beginning January 30 and ending February 26 compared to the 4 weeks beginning January 31 and ending February 27, 2022. February sales will be announced in conjunction with our Q2 quarterly results on Thursday, March 2 at 1:15 p.m. Pacific Time. If you have any 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, February 8. Thanks for calling Costco, and have a great day.