Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello. I'm Andrew Yoon, Director of Finance and Investor Relations, and I will review our sales results for the 5-week retail month of December, which started on Monday, December 1, and ended on Sunday, January 4. This period is compared to the 5 weeks that began last year on Monday, December 2, and ended on Sunday, January 5. 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 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 $29.86 billion, an increase of 8.5% from $27.52 billion last year. Reported comparable sales for the month were as follows: U.S., 6.0%; Canada, 8.4%; Other International, 10.6%; total company, 7.0%; digitally-enabled 18.9%. Comparable sales for the month, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: U.S., 6.3%; Canada, 6.0%; Other International, 5.6%; total company, 6.2%; digitally-enabled 18.3%. Total company comparable sales for the month, excluding all gas sales and the impact of foreign exchange was 6.9%. Our comp traffic or frequency for the month was up 2.7% worldwide and 2.4% 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 3.5%, Other International positively by approximately 5.4% and total company positively by approximately 1.2%. Gas price deflation negatively impacted total reported comp sales by approximately 40 bps. The average worldwide selling price per gallon was down 4.4% versus last year. Worldwide, the average transaction was up 4.2%, which includes the impact from gas deflation and FX. Excluding gas deflation and FX, average transaction was up 3.4%. In terms of regional and merchandising categories, the general highlights were as follows: U.S. regions with the strongest comparable sales were the Midwest, Northwest and Southeast. Other International and local currencies, we saw the strongest results in Australia, Japan and Korea. The negative impact of cannibalization was approximately minus 50 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. Food and sundries were positive mid-single digits. Better-performing departments included food, candy and sundries. Fresh foods were up high single digits. Better-performing departments included bakery and meat. Nonfoods were positive mid-single digits. Better-performing departments included jewelry, tires, small appliances and majors. Ancillary business sales were up mid-single digits. Pharmacy, food court and optical were the top performers. Gas was down low single digits, driven by price per gallon changes year-over-year. Looking ahead, the January reporting period will include the 4 weeks beginning January 5 and ending February 1, 2026, compared to the 4 weeks beginning January 6 and ending February 2, 2025. 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, January 14.