Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello, I'm Josh Dahmen, AVP of Finance and Investor Relations, and I will review our sales results for the 4-week retail month of July, which started on Monday, July 3, and ended on Sunday, July 30. And -- this period is compared to the 4 weeks that began last year on Monday, July 4, and ended on Sunday, July 31. 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 July came in at $17.60 billion, an increase of 4.5% from $16.85 billion last year. Reported comparable sales for July were as follows: in the U.S., 1.3%; Canada, 2.7%; Other International, 8.9%; total company, 2.5% and e-com, 4.1%. Comparable sales for July, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: In the U.S., 4.5%; Canada, 6.7%; Other International, 5.7%; total company, 5.0%; e-com, 4.0%. A -- July had 1 pre fourth of July shopping day this year versus no pre-holiday shopping days last year. We estimate that this positively impacted July 2023 U.S. total and comparable sales by a little more than 75 basis points and worldwide total and comparable sales by a little more than 50 basis points. Our comp traffic or frequency for July was up 6.1% worldwide and 6.4% 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 2.2%, Other International positively by approximately 5.0% and total company positively by approximately 0.3%. Gas price deflation negatively impacted total reported comp sales by approximately 2.8%. And -- the average worldwide selling price per gallon was down approximately 17% versus last year. Worldwide, the average transaction was down about 3.4%, which includes the negative impact from gas deflation and the positive impact from FX. 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 Texas. Other International, in local currencies, we saw the strongest results in Mexico, Spain and Korea. Year-over-year inflation for food and sundries continues to decrease and was lower than in June. Year-over-year fresh foods inflation has remained at historically normal levels in the low single digits. Moving to merchandise highlights. The following comparable sales results by category for the month exclude the positive impact of foreign exchange. Food and sundries were positive in the high single digits, sundries, [ canned B ] and food were the strongest departments. Fresh foods were up high single digits. Better performing departments included bakery and meat. Nonfoods was negative low single digits. Better-performing departments included jewelry, tires and health and beauty. Weaker departments were sporting goods, housewares and lawn and garden. Ancillary business sales were down high single digits, food court, pharmacy and optical were the top performers. Gasoline was lower driven by the average price per gallon. Looking ahead, the August reporting period will include 4 weeks beginning July 31 and ending August 27 compared to the 4 weeks beginning August 1 and ending August 28, 2022. And -- August sales will be announced on Wednesday, August 30, at 1:15 p.m. Pacific Time. If you have any Investor Relations questions, please call David Sherwood at (425) 313-8239, and -- or myself, Josh Dahmen at (425) 313-8254. This recording will be available until 5:00 p.m. Pacific Time, Wednesday, August 9.