Costco Wholesale Corporation (COST) Earnings Call Transcript & Summary

Hello. I'm Andrew Yoon, AVP of Finance and Investor Relations, and I'll review our sales results for the 5-week retail month of September, which started on Monday, August 31, and ended on Sunday, October 4. This period is compared to the 5 weeks that began last year on Monday, September 1, and ended on Sunday, October 5. 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 this recording in today's 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 $30.02 billion, an increase of 13% from $26.58 billion last year. Reported comparable sales for the month were as follows: U.S., 12.5%; Canada, 6.3%; Other International, 10.8%. Comparable sales for the month, excluding the impacts from changes in gasoline prices and foreign exchange were as follows: U.S., 8%; Canada, 4.9%; Other International, 7.7%. Digitally-enabled sales, which are sales initiated through a digital device, whether fulfilled through a warehouse, distribution center or Costco Travel, increased year-over-year as follows: Reported, 19%; excluding foreign exchange, 19.1%. Labor Day in the U.S. and Canada occurred 1 week later this year. The shift positively impacted September total comparable sales by a little more than 50 basis points. Total company comparable sales for the month, excluding all gas sales and the impact of foreign exchange were approximately 7.5%. Our comp traffic or frequency for the month was up 4.7% worldwide and 4.3% 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%, Other International positively by approximately 1.2%, and Total Company approximately flat. Gas price inflation positively impacted total reported comp sales by approximately 3.8%. The average worldwide selling price per gallon was up 32.8% versus last year. Worldwide, the average transaction was up 6.4%, which includes the impacts from gas inflation and FX. Excluding gas inflation and FX, average transaction was up 2.8%. 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, in local currencies, we saw the strongest results in Spain, Taiwan and China. The negative impact of cannibalization was approximately 60 basis points. 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-single digits. Better-performing departments included sundries, food, and frozen food. Fresh foods were up mid- to high single digits. Better-performing departments included bakery and meat. Nonfoods were positive high single digits. Better-performing departments included gift cards, housewares, and sporting goods. Ancillary sales were up mid-30s. Gas, pharmacy, and food court were the top performers. Gas was up mid-40s, driven by price per gallon changes year-over-year and high single-digit comparable gallon growth. Looking ahead, the October reporting period will include the 4 weeks beginning October 5 and ending November 1, 2026, compared to the 4 weeks beginning October 6 and ending November 2, 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, October 14.