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 October, which started on Monday, October 6, and ended on Sunday, November 2. This period is compared to the 4 weeks that began last year on Monday, October 7, and ended on Sunday, November 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 $21.75 billion, an increase of 8.6% from $20.03 billion last year. Reported comparable sales for the month were as follows: U.S., 6.6%; Canada, 6.3%; Other International, 7.2%; total company, 6.6%; digitally enabled 16.6%. Comparable sales for the month, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: U.S., 6.7%; Canada, 8.8%; Other International, 5.1%; total company, 6.8%; digitally enabled 16.7%. Last year's total and comparable sales were negatively affected by a little more than 1% in the U.S. and slightly less than 1% worldwide due to pull-forward activity associated with Hurricane Helene and the port strikes in September. Our comp traffic or frequency for the month was up 3.6% worldwide and 3.7% in the U.S. Foreign currencies year-over-year relative to the U.S. dollar impacted total and comparable sales as follows: Canada negatively by approximately 1.5%; Other International positively by approximately 2.2% and total company positively by approximately 0.1%. Gas price deflation negatively impacted total reported comp sales by approximately 0.2%. The average worldwide selling price per gallon was down approximately 2% versus last year. Worldwide, the average transaction was up about 2.9%, which includes the impacts from gas deflation and FX. Excluding gas deflation and FX, average transaction was up about 3.1%. 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 Northeast. Other international and local currencies, we saw the strongest results in Australia, Taiwan and Japan. The negative impact of cannibalization was approximately 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- to high single digits. Better performing departments included candy, food and cooler. Fresh foods were up mid- to high single digits. Better-performing departments included meat and bakery. Nonfoods were positive mid-single digits. Better-performing departments included Jewelry, Health & Beauty and Mattress. Ancillary business sales were up mid- to high single digits. Pharmacy, food court and hearing aids were the top performers. Gas was down low single digits, driven by price per gallon changes year-over-year. Looking ahead, the November reporting period will include the 4 weeks beginning November 3 and ending November 30 compared to the 4 weeks beginning November 4 and ending December 1, 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 November.