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 August, which started on Monday, August 5, and ended on Sunday, September 1. This period is compared to the 4 weeks that began last year on Monday, August 7 and ended on Sunday, September 3. 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 U.S. GAAP. As reported in our release, net sales for the month came in at $19.83 billion, an increase of 7.1% from $18.51 billion last year. Reported comparable sales for the month were as follows: in the U.S., 4.7%; Canada, 4.5%; Other International, 7.5%, total company, 5.0%, e-com, 22.9%. Comparable sales for the month, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: in the U.S., 6.7%, in Canada, 5.8%; Other International, 10.8% total company, 7.1%, e-com, 23.3%. Our comp traffic or frequency for the month was up 6.6% worldwide and 6.0% 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 1.1%. Other International by approximately 3.0% and total company by approximately 0.6%. Gas price deflation negatively impacted total reported comp sales by approximately 1.5%. The average worldwide selling price per gallon was down approximately 11% versus last year. Worldwide, the average transaction was down about 1.5%, 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 with the Northeast, Texas and Midwest. Other international and local currencies, we saw the strongest results in Mexico, Korea and Taiwan. Moving to merchandise highlights. The following comparable sales results by category for the month exclude the impact of foreign exchange. Food and sundries were positive mid-single digits, cooler, frozen and food were the strongest departments. Fresh foods were up high single digits. Better performing departments included meat and produce. Nonfoods were positive low double digits. Better performing departments included jewelry, gift cards and sporting goods. Ancillary business sales were down mid-single digits, pharmacy, food court and optical were the top performers. Gasoline was negative low double digits due to price deflation. Looking ahead, the September reporting period will include the 5 weeks beginning September 2 and ending October 6 compared to the 5 weeks beginning September 4 and ending October 8, 2023. September sales will be announced Wednesday, October 9 at 1:15 p.m. Pacific Time. Prior to September sales, we will be releasing our Q4 and total year fiscal '24 earnings on September 26. As a reminder, last year's fourth quarter had 17 weeks, while this year's fourth quarter has 16 weeks. 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. 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 4:00 p.m. Pacific Time, Thursday, September 12.