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 4-week retail month of August, which started on Monday, August 4, and ended on Sunday, August 31. This period is compared to the 4 weeks that began last year on Monday, August 5, and ended on Sunday, September 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 U.S. GAAP. As reported in our release, net sales for the month came in at $21.56 billion, an increase of 8.7% from $19.83 billion last year. Reported comparable sales for the month were as follows: U.S., 6.1%; Canada, 6.8%; Other International, 6.7%; total company, 6.3%; e-com, 18.4%. Comparable sales for the month, excluding impacts from changes in gasoline prices and foreign exchange were as follows: U.S., 6.7%; Canada, 9.4%; Other International, 5.3%; total company, 6.9%; e-com, 18.3%. Our comp traffic or frequency for the month was up 4.0% worldwide and 4.3% in the U.S. Foreign currencies year-over-year related to the U.S. dollar impacted total and comparable sales as follows: Canada negatively by approximately minus 1.2%; Other International positively by approximately 1.7%; and total company positively by approximately 0.1%. Gas price deflation negatively impacted total reported comp sales by approximately minus 0.6%. The average worldwide selling price per gallon was down approximately minus 5.2% versus last year. Worldwide, the average transaction was up about 2.2%, which includes the impacts from gas deflation and FX. Ex gas deflation and FX, average transaction was up about 2.7%. In terms of regional and merchandising categories, the general highlights were as follows: U.S. regions with the strongest comparable sales were the Midwest, Southeast and Northwest. Other International and local currencies, we saw the strongest results in Australia, Taiwan and the U.K. 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 impacts of foreign exchange. Food and sundries were positive mid-single digits. Better-performing departments include cooler, candy and food. Fresh foods were up mid- to high single digits. Better-performing departments included meat and produce. Nonfoods were positive high single digits. Better-performing departments included jewelry, majors and garden. Ancillary business sales were up low single digits. Optical, pharmacy and hearing aids were the top performers. Gas was down mid-single digits, driven by price per gallon changes year-over-year. Looking ahead, the September reporting period will include 5 weeks beginning September 1 and ending October 5 compared to the 5 weeks beginning September 2 and ending October 6, 2024. Prior to the September sales, we'll be releasing our Q4 and total year FY 2025 earnings on September 25. Earnings will be announced after market close with a conference call to follow at 2:00 p.m. PT. The call will be streamed live via our Investor Relations website. If you have any Investor Relations questions, please call Josh Dahmen at (425) 313-8254 or me at (425) 313-6305. This call will be available until 4:00 p.m. Pacific Time, Thursday, September 11.