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 March, which started on Monday, March 3, and ended on Sunday, April 6. This period is compared to the 5 weeks that began last year on Monday, March 4, and ended on Sunday, April 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/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 $25.51 billion, an increase of 8.6% from $23.48 billion last year. March had 1 additional shopping day versus last year due to the calendar shift of Easter. This positively impacted total and comparable sales by approximately 1.5%. Reported comparable sales for the month were as follows: in the U.S., 7.5%; Canada, 4.1%; Other International, 2.9%; total company, 6.4%; and e-com, 16.2%. Comparable sales for the month, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: in the U.S., 8.7%; Canada, 10.6%; Other International, 9.9%; total company, 9.1%; and e-com, 17.5%. Our comp traffic or frequency for the month was up 6.1%, both worldwide and 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 6.1%, Other International by approximately 6.6% and total company by approximately 1.7%. Gas price deflation negatively impacted total reported comp sales by approximately 0.9%. The average worldwide selling price per gallon was down approximately 7.4% versus last year. Worldwide, the average transaction was up about 0.3%, 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, Northeast and Southeast. Other International in local currencies, we saw the strongest results in Spain, Mexico and Taiwan. Moving to merchandise highlights. The following comparable sales results by category for the month exclude the impact of foreign exchange. Foods and sundries were positive high single digits. Better-performing departments included cooler, frozen foods and candy. Fresh foods were up low double digits. Better-performing departments included meat and produce. Nonfoods were positive low double digits. Better-performing departments included jewelry, toys and seasonal and majors. Ancillary business sales were down low single digits. Pharmacy, optical and hearing aids were the top performers. Gas was down high single digits, driven by price per gallon changes year-over-year. Looking ahead, the April reporting period will include the 4 weeks beginning April 7 and ending May 4 compared to the 4 weeks beginning April 8 and ending May 5, 2024. April will have 1 fewer shopping day than last year due to the timing of Easter. If you have any Investor Relations questions, please call David Sherwood at (425) 313-8239, Andrew Yun at (425) 313-6305 or me at (425) 313-8254. This recording will be available until 4:00 p.m. Pacific Time, Wednesday, April 16.