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 July, which started on Monday, July 6, and ended on Sunday, August 2. This period is compared to the 4 weeks that began last year on Monday, July 7, and ended on Sunday, August 3. This recording 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 all gasoline sales and the impact of 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 $23.12 billion, an increase of 10.7% from $20.89 billion last year. Reported comparable sales for the month were as follows: U.S., 10.3%; Canada, 4.2%; Other International, 6.0%; total company, 8.9%; digitally-enabled, 17.7%. Comparable sales for the month, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: U.S., 6.9%; Canada, 4.9%; Other International, 6.6%; total company, 6.6%; digitally-enabled 18.2%. Total company comparable sales for the month, excluding all gas sales and the impact of foreign exchange were approximately 6.7%. Our comp traffic or frequency for the month was up 3.6% worldwide and 3.3% 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 3.0%, Other International by approximately 1.5%, and total company by approximately 0.6%. Gas price inflation positively impacted total reported comp sales by approximately 2.9%. The average worldwide selling price per gallon was up 25.2% versus last year. Worldwide, the average transaction was up 5.1%, which includes the impacts from gas inflation and FX. Excluding gas inflation and FX, average transaction was up 2.9%. 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 San Diego. Other International and local currencies, we saw the strongest results in Taiwan, Korea and China. The negative impact of cannibalization was approximately minus 60 basis points for the total company. Moving to merchandising highlights. The following comparable sales results by category for the month exclude the impacts of foreign exchange. Foods and sundries were positive low to mid-single digits. Better-performing departments included food, frozen foods and sundries. Fresh foods were up mid-single digits. Better-performing departments included bakery and meat. Nonfoods were positive mid-single digits. Better-performing departments included jewelry, home furnishing and housewares. Ancillary business sales were up high 20s. Pharmacy, gas and food court were the top performers. Gas was up low 30s, driven by price per gallon changes year-over-year. Looking ahead, the August reporting period will include the 4 weeks beginning August 3 and ending August 30, 2026, compared to the 4 weeks beginning August 4 and ending August 31, 2025. If you have any Investor Relations questions, please call Josh Dahmen at (425) 313-8254, Bryan Starnes at (425) 427-7403, or me at (425) 313-6305. This recording will be available until 4:00 p.m. Pacific Time, Wednesday, August 12.