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 March, which started on Monday, April 2 (sic) [ March 2 ] and ended on Sunday, April 5. This period is compared to the 5 weeks that began last year on Monday, March 3, and ended on Sunday, April 6. 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 $28.41 billion, an increase of 11.3% from $25.51 billion last year. March had one less shopping day versus last year due to the calendar shift of Easter. This negatively impacted both total and comparable sales by approximately 1% and 1.5%. Reported comparable sales for the month were as follows: U.S., 8.7%; Canada, 10.7%; Other International, 11.9%; total company, 9.4%; digitally enabled 23.3%. Comparable sales for the month, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: U.S., 6.2%; Canada, 5.4%; Other International, 6.6%; total company, 6.2%; digitally enabled, 22.5%. Total company comparable sales for the month, excluding all gas sales, the impact of foreign exchange and the calendar shift of Easter was approximately 7.8%. Our comp traffic or frequency for the month, including the negative impact from the Easter shift, was up 1.5% worldwide and 0.7% in the U.S. Foreign currencies year-over-year relative to the U.S. dollar impacted total and comparable sales as follows: Canada positively by approximately 4.5%; other international positively by approximately 4.4% and total company positively by approximately 1.2%. Gas price inflation positively impacted total reported comp sales by approximately 200 basis points. The average worldwide selling price per gallon was up 17.8% versus last year. Worldwide, the average transaction was up 7.8%, which includes the impacts from gas inflation and FX. Excluding gas inflation and FX, average transaction was up 4.6%. In terms of regional and merchandising categories, the general highlights were as follows: U.S. regions with the strongest comparable sales were the Southeast, Midwest and Los Angeles. Other international and local currencies, we saw the strongest results in Australia, Japan and Taiwan. The negative impact of cannibalization was approximately minus 40 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 low to mid-single digits. Better-performing departments included food, candy and sundries. Fresh foods was up mid- to high single digits. Better-performing departments included bakery and meat. Nonfoods were positive mid- to high single digits. Better-performing departments included jewelry, majors and hardware. Ancillary business sales were up mid-20s. Pharmacy, gas and food court were the top performers. Gas was up mid- to high 20s, driven by price per gallon changes year-over-year as well as an acceleration in volume growth. Looking ahead, the April reporting period will include the 4 weeks beginning April 6 and ending May 3, 2026, compared to the 4 weeks beginning April 7 and ending May 4, 2025. April will benefit from the calendar shift of Easter. 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, April 15.