Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello, and thank you for calling Costco. I'm Josh Dahmen, AVP of Finance and Investor Relations, and I will review our sales results for the 4-week retail month of April, which started on Monday, April 3, and ended on Sunday, April 30. This period is compared to the 4 weeks that began last year on Monday, April 4, and ended on Sunday, May 1. 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 April came in at $17.85 billion, an increase of 3.0% from $17.33 billion last year. Reported comparable sales for April were as follows: in the U.S., 0.9%; Canada, 0.5%; Other International, 4.9%; total company, 1.4%; and e-commerce, negative 5.9%. Comparable sales for April, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: in the U.S., 2.9%; Canada, 8.3%; Other International, 7.5%, total company, 4.3% and e-com, negative 4.9%. Our comp traffic or frequency for April was up 5.2% worldwide and 4.0% 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 6.7%, Other International by approximately 2.2% and total company by approximately 1.2%. Gas price deflation negatively impacted total reported comp sales by approximately 1.7%. The average worldwide selling price per gallon was down approximately 11% versus last year. Worldwide, the average transaction was down about 3.6%, 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, Midwest and Southeast. Other international and local currencies, we saw the strongest results in Spain, U.K. and Mexico. Year-over-year inflation for both food and sundries and fresh foods was lower than in March. 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, sundries, cooler and food were the strongest departments. Fresh foods were up mid-single digits. Better performing departments included bakery and produce. Nonfoods was negative low single digits. Better-performing departments included tires, automotive and health and beauty. Underperforming departments were home furnishings, majors, primarily consumer electronics and jewelry. Ancillary business sales were down mid-single digits. Food court, pharmacy and optical were the top performers. Gasoline underperformed driven by the average price per gallon. Looking ahead, we will release our Q3 FY '23 earnings on Thursday, May 25. Earnings will be announced after market close with a conference call to follow at 2:00 p.m. Pacific Time. The call can be streamed live via our Investor Relations website. The May reporting period will include the 4 weeks beginning May 1 and ending May 28 compared to the 4 weeks beginning May 2 and ending May 29, 2022. May sales will be announced on Thursday, June 1 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, May 10. Thanks for calling Costco, and have a great day.