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 May, which started on Monday, May 1, and ended on Sunday, May 28. This period is compared to the 4 weeks that began last year on Monday, May 2, and ended on Sunday, May 29. 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 our 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 May came in at $18.45 billion, an increase of 1.2% from $18.23 billion last year. Reported comparable sales for May were as follows: in the U.S., negative 1.5%; in Canada, positive 0.5%; Other International, positive 5.5%; total company, negative 0.3% and e-com, negative 7.6%. Comparable sales for May, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: in the U.S., positive 1.7%; in Canada, positive 7.9%; Other International, positive 6.4%; total company, positive 3.3% and e-com, negative 7.0%. Our comp traffic or frequency for May was up 5.1% worldwide and 4.3% in the U.S. Foreign currencies year-over-year relative to the U.S. dollar impacted total and comparable sales as follows: Canada negatively by approximately 5.0%, Other International positively by approximately 0.1% and total company, negatively by approximately 0.7%. Gas price deflation negatively impacted total and reported comp sales by approximately 3.0%. The average worldwide selling price per gallon was down approximately 19% versus last year. Worldwide, the average transaction was down about 5.1%, which included the negative impacts from FX and gas deflation. In terms of regional and merchandising categories, the general highlights were as follows: the U.S. regions with the strongest comparable sales were the Northwest, Northeast and Midwest. Other International in local currencies, we saw the strongest sales in the U.K., Mexico and Spain. Year-over-year inflation for both food and sundries and fresh foods was lower than in April. 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, candy and cooler were the strongest departments. Fresh foods were up mid-single digits. Better-performing departments included bakery and meat. Nonfoods was negative low single digits. Better-performing departments included tires, health and beauty and apparel. Underperforming departments were home furnishings, office, hardware and majors. Ancillary business sales were down low in double digits. Food court, pharmacy and optical were the top performers. Gasoline underperformed driven by the average price per gallon. Looking ahead, the June reporting period will include 5 weeks beginning May 29 and ending July 2 compared to the 5 weeks beginning May 30 and ending July 3, 2022. June sales will be announced on Thursday, July 6 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, Thursday, June 8.