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 October, which started on Monday, October 2 and ended on Sunday, October 29. This period is compared to the 4 weeks that began last year on Monday, October 3, and ended on Sunday, October 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 October came in at $18.53 billion, an increase of 4.5% from $17.73 billion last year. Note that in our release, we also reported net sales for the first 8 weeks of fiscal year 2023 and 2024. The year-to-date net sales are not for like retail weeks due to the 53rd week in our fiscal 2023. This was done in an effort to tie year-to-date net sales to our fiscal reporting calendar and will persist for year-to-date and quarter-to-date net sales comparisons for the full fiscal year. For comparable sales and retail monthly net sales reporting, results will be based on comparable weeks year-over-year. Reported comparable sales for October were as follows: in the U.S., 1.1%; Canada, 8.5%; Other International, 8.2%; Total Company, 3.0%; E-com, 3.7%. Comparable sales for October, excluding impacts from changes in gasoline prices and foreign exchange were as follows: in the U.S., 2.2%; Canada, 9.5%; Other International, 4.1%; Total Company 3.4%; E-com 3.1%. Our comp traffic or frequency for October was up 4.1% worldwide and 2.9% in the U.S. Foreign currencies year-over-year relative to the U.S. dollar impacted total and comparable sales as follows: Canada positively by approximately 0.1%, Other International positively by approximately 4.6% and Total Company positively by approximately 0.6%. Gas price deflation negatively impacted total reported comp sales by approximately 1.0%. The average worldwide selling price per gallon was down approximately 7% versus last year. Worldwide, the average transaction was down about 1.0%, which includes the impacts from gas deflation and 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 and local currencies, we saw the strongest results in Mexico, Spain and the U.K. 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 mid-single digits. Food, sundries and cooler 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 jewelry, tires and Health & Beauty [indiscernible]. Weaker departments were office supplies, home furnishings and sporting goods. Ancillary business sales were positive low single digits. Pharmacy, food court and hearing aids were the top performers. Gasoline was down mid-single digits. Looking ahead, the November reporting period will include the 4 weeks beginning October 30 and ending November 26 compared to the 4 weeks beginning October 31 and ending November 27, 2022. The November sales will be announced Wednesday, November 29 at 1:15 p.m. Pacific Time. If you have any Investor Relations questions, please call David Sherwood at (425) 313-8239 or give me a call at (425) 313-8254. This recording will be available until 5:00 p.m. Pacific Time, Wednesday, November 8.