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 5-week retail month of March, which started on Monday, February 27 and ended on Sunday, April 2. This period is compared to the 5 weeks that began last year on Monday, February 28 and ended on Sunday, April 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 March came in at $21.71 billion, an increase of 0.5% from $21.61 billion last year. Comparable sales were as follows: on a reported basis, in the U.S., the 5 weeks negative 1.5%, 31 weeks, 5.7%. In Canada, the 5 weeks, negative 2.4%, 31 weeks, 1.9%, Other international, the 5 weeks 2.0%, 31 weeks, 0.9%. Total company, the 5 weeks negative 1.1%, the 31 weeks, 4.5%. E-comm, the 5 weeks, negative 12.7% and 31 weeks, negative 7.8%. Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: in the U.S., the 5 weeks 0.9%, 31 weeks, 5.2%; Canada, 5 weeks, 7.4%; 31 weeks, 8.5%; Other International, 5 weeks, 7.6%, 31 weeks, 9.1%; Total company, the 5 weeks, 2.6%, 31 weeks, 6.1%; e-com, the 5 weeks, negative 11.6% and 31 weeks, negative 6.6%. Our comp traffic or frequency for March 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 8%; Other International, approximately 5.1%; and total company by approximately 1.7%. Gas price deflation negatively impacted total reported comp sales by approximately 2.0%. The average worldwide selling price per gallon was down approximately 14% versus last year. Worldwide, the average transaction was down about 5.8%, which included the negative impacts from FX and gas deflation. In terms of regional and merchandising categories, the general highlights were as follows: U.S. regions with the strongest comparable sales were the Northeast, Southeast and Midwest. Other International in local currencies, we saw the strongest results in U.K., Spain and Mexico. Year-over-year inflation for food and sundries and fresh foods were both down from February. 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 high single digits. Cooler, sundries and food were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included bakery and produce. Nonfoods was negative mid- to high single digits. Better-performing departments included tires, health and beauty and apparel. Underperforming departments were home furnishings, toys and seasonal, majors and jewelry. Ancillary business sales were down high single digits. Food court, pharmacy and hearing aids were the top performers. Gasoline underperformed driven by the average price per gallon. Looking ahead, the April reporting period will include the 4 weeks beginning April 3 and ending April 30 compared to the 4 weeks beginning April 4 and ending May 1, 2022. The April sales will be announced on Wednesday, May 3 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 5:00 p.m. Pacific Time, Wednesday, April 12. Thanks for calling Costco, and have a great day.