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, December 2 and ended on Sunday, January 5. This period is compared to the 5 weeks that began last year on Monday, December 4 and ended on Sunday, January 7. 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. 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 $27.52 billion, an increase of 9.9% from $25.03 billion last year. E-commerce sales in December were positively impacted by an estimated 15 percentage points due to Thanksgiving, Black Friday and Cyber Monday occurring a week later this year versus last year. Total and comparable sales were positively impacted by approximately [ 1 and 1.5% ] as a result of the shift in e-commerce sales. Reported comparable sales for the month were as follows: in the U.S., 9.3%; in Canada, 4.3%; Other International, 1.0%; total company, 7.4%; and e-commerce, 34.4%. Comparable sales for the month excluding the impacts from changes in gasoline prices and foreign exchange were as follows: in the U.S., 9.8%; in Canada, 10.3%; Other International, 9.8%; total company, 9.9%; and e-com, 35.7%. Our comp traffic or frequency for the month was up 5.5% worldwide and 5.3% in the U.S., including the positive impact from the holiday shift. Foreign currencies year-over-year relative to the U.S. dollar negatively impacted total in comparable sales as follows: Canada by approximately 6.7%, Other International by approximately 8.7% and total company by approximately 2.2%. Gas price deflation negatively impacted total reported comp sales by approximately 0.3%. The average worldwide selling price per gallon was down approximately 2.7% versus last year. Worldwide, the average transaction was up about 1.8%, which includes the negative 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, Northeast and Southeast. 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. Better performing departments included cooler, candy and foods. Fresh foods were up high single digits. Better performing departments included meat and produce. Nonfoods were positive high teens. Better-performing departments included jewelry, gift cards and toys and seasonal. Ancillary business sales were up low single digits. Pharmacy, optical and food court were the top performers. Gasoline was negative mid-single digits due primarily to price deflation. Looking ahead, the January reporting period will include the 4 weeks beginning January 6 and ending February 2 compared to the 4 weeks beginning January 8 and ending February 4, 2024. January sales will be announced Wednesday, February 5 at 1:15 p.m. Pacific Time. If you have any Investor Relations questions, please call David Sherwood at (425) 313-8239, Andrew Yoon at (425) 313-6305 or me at (425) 313-8254. This recording will be available until 4:00 p.m. Pacific Time Wednesday, January 15.