Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello. I'm Andrew Yoon, Director of Finance and Investor Relations, and I'll review our sales results for the 5-week retail month of June, which started on Monday, June 2 and ended on Sunday, July 6. This period is compared to the 5 weeks that began last year on Monday, June 3, and ended on Sunday, July 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 a 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 $26.44 billion, an increase of 8.0% from $24.48 billion last year. Reported comparable sales for the month were as follows: U.S., 4.7%; Canada, 6.7%; Other International, 10.9%; total company, 5.8%; e-com, 11.5%. Comparable sales for the month, excluding impacts from changes in gasoline prices and foreign exchange, were as follows: U.S., 5.5%; Canada, 7.9%; Other International, 8.2%; total company, 6.2%; e-com, 11.2%. Our comp traffic or frequency for the month was up 3.4% worldwide and 2.8% in the U.S. Foreign currencies year-over-year relative to the U.S. dollar positively impacted total and comparable sales as follows: Canada by approximately 0.2%, Other International by approximately 3.4% and total company by approximately 0.5%. Gas price deflation negatively impacted total reported comp sales by approximately minus 0.9%. The average worldwide selling price per gallon was down approximately minus 7.4% versus last year. Worldwide, the average transaction was up about 2.4%, which includes impacts from gas deflation and FX. Ex gas deflation and FX, average transaction was up about 2.8%. In terms of regional and merchandising categories, the general highlights were as follows: U.S. regions with the strongest comparable sales were the Northwest, Midwest and Southeast. Other International and local currencies, we saw the strongest results in Australia, Mexico and Taiwan. The negative impact of cannibalization was approximately minus 60 bps for the total company. Moving to merchandising highlights. The following comparable sales results by category for the month exclude the impact of foreign exchange. Foods 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 mid- to high single digits. Better-performing departments included jewelry, majors and gift cards. Ancillary business sales were down low single digits. Pharmacy, hearing aid and optical, were the top performers. Gas was down mid- to high single digits, driven by price per gallon changes year-over-year. Looking ahead, the July reporting period will include the 4 weeks beginning July 7 and ending August 3 compared to the 4 weeks beginning July 8 and ending August 4, 2024. If you have any Investor Relations questions, please call Josh Dahmen at (425) 313-8254 or me at (425) 313-6305. This recording will be available until 4:00 p.m. Pacific Time, Wednesday, July 16.