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 5-week retail month of December, which started on Monday, November 27 and ended on Sunday, December 31. This period is compared to the 5 weeks that began last year on Monday, November 28 and ended on Sunday, January 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. Comparable sales and comparable sales excluding impacts from changes in gasoline prices and foreign exchange are intended as supplemental information and are not a substitute for net sales presented in accordance with GAAP. As reported in our release, net sales for December came in at $26.15 billion, an increase of 9.9% from $23.80 billion last year. This year's 5-week retail month had 1 additional shopping day due to the timing of New Year's Day. This benefited total and comparable sales by approximately 3%. Reported comparable sales for December were as follows: in the U.S., 7.3%; Canada, 12.8%; Other International, 10.5%, total company, 8.5%, e-comm, 17.7%. Comparable sales for December, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: in the U.S., 7.4%; Canada, 11.9%; Other International, 8.1%; total company, 8.1%; e-comm, 17.4%. Our comp traffic or frequency for December was up 7.5% worldwide and 6.5% in the U.S., including the benefit of the holiday shift. Foreign currencies year-over-year relative to the U.S. dollar impacted total and comparable sales as follows: Canada, positively by approximately 1.0%; Other International, positively by approximately 2.8%; and total company, positively by approximately 0.5%. Gas price deflation negatively impacted total reported comp sales by approximately 0.1%. The average worldwide selling price per gallon was down approximately 1% versus last year. Worldwide, the average transaction was up about 0.9%, 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 Midwest, Texas and Southeast; Other International, in local currencies, we saw the strongest results in Mexico, Spain and the United Kingdom. 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 high single digits. Sundries, food and cooler were the strongest departments. Fresh foods were up high single digits. Better-performing departments included bakery and produce. Nonfoods was positive high single digits. Better-performing departments included gift cards, jewelry and tires. Weaker departments were toys and seasonal, sporting goods and office supplies. Ancillary business sales were positive high single digits. Hearing aids, food court and pharmacy were the top performers. Looking ahead, the January reporting period will include the 5 weeks beginning January 1 and ending February 4 compared to the 5 weeks beginning January 2 and ending February 5, 2023. January sales will be announced Wednesday, February 7 at 1:15 p.m. Pacific Time. With the shift of New Year's Day, January's total and comparable sales will be negatively impacted due to 1 fewer shopping day. 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, Thursday, January 11.