Costco Wholesale (COST) 11 Dec 202021 Q1 Earnings call transcript

Thank you for standing by and welcome to the Q1 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Thank you. I would now like to hand the conference over to your speaker today, Mr. Galanti. Richard ahead. go Please

Act call, and results that to forward-looking these of may Litigation the Cindy, risks statements start uncertainties performance and statements other I limited statements. uncertainties include, by meaning and identified that Reform Securities differ Private from stating discussions actual to outlined the XXXX. good to you, the to These those risks time everyone. materially as involve with those and events, afternoon company's cause will within The of indicated and/or SEC. as Thank in time will include from public today's are risks reports by not well the such in but filed statements

$XX.XX per made the also statements, company million update quarter our release, the sales up statements to benefit weeks COVID-XX per company’s to XXXX, by undertake compensation, to $XX of as from billion million not except Reported $X.XX year’s net special we which share, related the $X.XX share dividend and for quarter – the benefits In diluted million Forward-looking pre-tax as billion as million cash year premium quarter Last to quarter at reported well. wages year’s they received last extent $XX.XX for ended XXX(k) only share billion, and speak today's Net these results does included first cost the by fiscal by of the required law. the related $XXX the QX. stock-based results our share the press year. November XX deductibility in or year XX.X% operating are $X.XX share. a per fiscal of first This of related in or per $XXX or per increased due to of of tax for last compared or And this first XX. per to year’s quarter the the share, tax $XX $X.XXX diluted compensation. $X.XX $X.XX included came was $X.XX to $XXX to the date plan or stock-based received included $X.XX Company’s participants; income

reported U.S., XX.X% XX.X%, sales reported FX In terms metrics, the a increase. impacts, a for XX.X% ex our we quarter for Other gas reported deflation FX gas the first figure, gas and comp Canada, on would the XX.X%. weeks the XX.X% ex international for basis, been have excluding of FX reported XX weeks and XX XX.X%. and XX.X%

and XX.X% XX XX.X%. excluding the for XX.X%, sales total sold comp would reported a and and excluding all was company weeks gas the Ecommerce, increase XX.X% reported be for we So basis deflation FX, XX.X%. on FX, the

QX X.X% U.S. of X.X% sales the comp or frequency terms in and shopping increased metrics, In plus worldwide traffic

Our average X.X% FX. include negative up transaction year-over-year gas the quarter from in size impact impacts and in company for up U.S. X.X% deflation These the the the was positive and from the

points. about Foreign dollar gasoline sales and currencies basis approximately relative negatively XX price impacted by basis by impacted the to positively U.S. deflation XXX sales points

$XX income or fee X.X%. in it X.X%. came been the up membership statement, have or $XXX.X million down $XX million, Going would income up FX, million at Ex

eight we new units. opened quarter, the During

and to was as of it our the XX.X%, of was a of worldwide, was renewal compares as terms In was and renewal ago. U.S. same Canada XX.X%, ago which XXXX it quarter rates, quarter rate that QX a the XX.X% end of

result was rate primarily we XX.X%, the Now the to of this be the in renewals compared due XX.X% U.S. X.X% and to Canada deferred believe decline to of what Canada the pandemic.

at U.S. a in in QX the the end. the the renewal X.X% minus our By United came in to frequency same or compared in figure a States. traffic quarters For X.X%, warehouses at both rate way, example, was Canada plus

terms of XX memberships end totaled weeks $XX.X $XX.X and weeks end, $XXX.X an executive XX.XX% during gross to in fiscal of to XX QX million. Also million, earlier XX.XX% line, $XX.X $XXX,XXX ago. first margin from the at On of members the to total points $XXX.X year XX quarter. paid million at million, households higher quarter at end QX our In year-over-year end, million, earlier QX a compared total by sales, paid of first increase basis reported end was number up in of the cardholders at at compared QX was margin gross coming was first quarter at

would Excluding increase be XX the gas basis point XX points. deflation, basis

light columns two to up down a on QX, was merchandize shed year-over-year in on a points, margin basis components numbers of XX basis here jot core the XX. XXXX, plus you If on basis reported of reported gross margin, the

minus XX without minus minus minus if plus you as basis gas ex gas column, deflation a on reported would have basis basis reported businesses, reported XX year-over-year basis and the XX, Second XX and XX X. XX deflation. up deflation, minus Ancillary Other, and and was again basis percent sales gross quarter points it been as two margin basis add the XX basis and X% reward X points. in up points on points ex up minus points. of reported columns, a gas a

shift last XX margin total operations last our a year. component in resulted the the gross margin coming was gas quarter, Now contribution from had to ancillary Similar gross core merchandize to higher ex of sales core. versus up dollars sales from a the we XX, This higher deflation. core

of other amount merchandize reward. lines, margins of is Fresh still six here efficiency businesses gains the to basis driver points. a the Looking core XX was from XX minus aids direct as higher a costs lesser basis was again And hard extent told, several the hearing lines courts. own we logistics, and fresh manufacturing, higher were the basis only from incremental for Innovel These Ancillary impacted relation optical surprising total gross Costco year-over-year food fulfillment costs the year-over-year of productivity benefited quarter a and at ancillary did points, attributable our product margins the spoilage. points the well. labor ago the points other $XXX significantly and and components XX year-over-year. by gas, was in we from gas basis and minus year-over-year. costs the are sundries, in $XX here XX and months impact name All the had the But which the this you gas QX on basis the and relative XX all margin points, operations. COVID-XX there. will, acquisition reported the wages sales as strong biggest slight minus from in margins coming the foods main to their previously of mentioned. with of three million by if up that of with basis $XX core prior quarter Food gross the X% margin, soft and Nothing improvement to hitting for was lower our allocated in of ex on foods categories ex and COVID million shown sales year-over-year a to margins even deflation. million Most production reported the by other basis driver. travel in fresh all lower quarter quarter-on-quarter

columns so and or numbers XX.XX% XX basis SG&A a Moving lower two reported jotting percent plus Again XX, a XX by minus Central, a gas and plus basis columns plus Other, X or of gas core plus at XX in X was lower basis total and to XX of better points. of basis X reported sales the first year-over-year those lower coming compensation, was down be X XX – XX a summing ex SG&A, the plus ex and sales, gas points earlier to our reported and of of XX. quarter basis as and reported basis deflation in points points. points. compared ex basis better deflation, SG&A basis points two first better XX minus year in basis operations Stock plus QX deflation, deflation, XX.XX% or points was plus by quarter plus without a better points, the year-over-year basis or would improvement of XX and up, on improvement. gas to

SG&A There sales was minute. again, shows improvement deflation the XX the excludes This a ex talk – the increases. points. Now, basis in significant COVID it into core cost significant leverage of merchandize about core, strong basic which I’ll was

incremental In earlier. terms of year-over-year deflation. XX pay million had wages we mentioned January Again, improved of even that through at time. premium million others, number extended Xrd COVID-XX the have or SG&A the number been the expenses, premium point from ex minus including costs nicely. these $XXX – this $XXX COVID-related or The minus $XXX of deflation are million These total XX gas basis

lower due it and a right QX. million million by statement FX year preopening did would ten higher QX into operating which lower on interest was is opened year before percent number of offset the year higher earlier. first year’s compared been to line, other versus million coming our earlier. billion better rates, higher had this income beginning in XXXX included or compared by All other large Interest $X - million was dollars up expense now $XX $XX of $XX openings interest interest $XX Next part the of income one year-over-year. million net Last gross, to $XX million four $X.XXX We quarter, quarter income year openings, Interest year. three income year during eight two relocations itself for the even income year-over-year. of net and relocation had those have a expense, pay. by preopening year-over-year, million million to this – million was business complex, and for our quarter other this at was year and the XX%, $XX the in increase course, was the new and by on went a $X.XX reported income lower couple was and last last on in we – operating told, within to a related poultry Below poultry the increased premium billion which $XX

So, reported billion a income QX coming earlier. XXXX pretax in in at compared $X.XX XX% up overall, year year, $X.XXX to was billion this

special the year’s discrete deductibility effective items as - in Company’s tax is this – discussed, of earlier XXX(k) XX.X%. discussed year’s payable fiscal full the and full dividend XX% to as payable rates tax Both currently quarter from year’s these be between first participants participants quarter treatment projected first excluding of tax of fiscal the mentioned benefited tax in tax rate XX.X% the compensation benefited year’s last the income from compared earlier. QX This to in year. was year’s also in taxes, terms our tax XX.X%, stock-based rate of as call. In the portion This XXX(k) plan XXXX the rate, to that to

In terms of in we warehouse expansion, mentioned of new eight first this quarter year, units. fiscal opened the as I net

the XX% for year Our the in in X XX% in somewhere plan X is range. to second QX and or and X quarter or the QX. in X None

end, As warehouse XXX total million square QX footage of stood feet. square at

$XXX XXXX, of of capital quarter in we first expenditures, spent terms In the approximately million.

XXXX in Our CapEx spend to full billion $X $X.X to year range. fiscal is the be still billion estimated for

and same convention comp of come grocery XX.X% nearly which warehouses ecommerce, of our at the increased Instacart the day continues an - XX.X% to bulky XXX% now in Logistics push rebranded continue in Innovel, have to sales our online strong then health and and usual items we rate the OTC e-commerce just more We’ve grow themselves same This quarter, our would as been shop grocery site. pharmacy, added we numbers as with electronics. our nicely. mentioned include lastly, program center terms overall, specific In members. delivery day improvements grow loaded ecommerce comps, the . I in the in that days as third-party they Costco departments, TVs of and over big in a few dates added most year-over-year. And and and result bulky Total past our If small where aids, trained fun made at in FX and very ex select items we That XXX%. beauty to the agents, third-party and this and electrics sundries, food figure to delivered just XX.X% continues excludes and well. to a can two our housewares, stronger scheduler couple A and big sports specifically items these QX, grew quarter call ago. follow for other members QX to

private a $XX,XXX Babe jet Autographed We’ve operator. for service a have and a Ruth also sold of memberships for Autographed Ty a Cobb We Slugger Baseball $XXX,XXX. Up, recently Louisville number for Wheels Bat

issues strong the summer to quarter this results of fourth to past sales in impacts to enjoy sales Now and strong fiscal have our COVID turning similar continued a XXXX. and of the during perspective, surrounding some first quarter, we it. results From fiscal sales our

health and items dining, foot many for to been people to mattresses, running sales of continue and are and has ancillary year-over-year and sales in now you aids travel, generate aids businesses if and production exercise increased. we’ve a XX,XXX some in food on From improved as sales view Most in equipment, the alike, will. strong capacity and from foods and housewares, products were and benefited at they And fresh food cookware, and and in have and also We redirected courts. et earlier, the furniture factories cetera. and slower sundries less electronics, and suppliers most air those and to supply our cases, spending dollars domestics, hotel gas, home of up as seem like perspective, our and quarter, mentioned travel categories chain are hearing beauty

increases as However, procure products demand electronics small like, of and higher creating items. can had electric certain an we certain higher supply we’ve some well things would XXX% certain sales more, even are even in instances as housewares XX%, more sales. issues. Examples item of of even major increases are or There items, still if and appliances, equipments, exercise include some

but front, in longer to at well a have some The container On days, in as origin, typically congestion there states. little some the transportation some two been destination shortages ports four latter cases. at here the as

being through third-party about just industry number through weeks in are relief read past delivery items of or XXXX, few expect now the of as and some March times well, in given been so terms We items managing until challenges that carriers. it have the of may not of delayed there the have shipped you

to done confident reminded some people and non-food in things. pods well of home we items, to items case, as took our delivery of sure air members stated While I adjusted items, times several health We’ve are non-food some and this in due items our also are a may laptops fill-ins others, and card are same insta timely am on sales delivery, our day and many that they providing online hundred other have shop be like essentials. holiday not side in And as including and over-the-counter line and to we, delivery early. pods, aid like expected couple beauty

went terms toughest gloves, paper shape, A cases, food are some good Overall, as side. some fresh also and on on and paper In COVID sprays, up in and produce of again. wipes sundries, limits surface continued proteins in as spiking some is, the Nitrile goods. dairy Demand goods. well items area cleaning in as sales sanitizing began

a planning candy conservative pretty and terms Halloween went In Halloween-specific merchandize holiday needs the last little uses mentioned our results, I think I more and and of a little a of with earnings as came costumes question, clean we of the in out on more call went terms house. items. Halloween, into basic of Christmas, We terms in levels. we inventory for responding to

inventories. items gone with So it baskets. food/gift very like on added pressure already candy had we barbeques we’ve A decorations some cut and less, strongly through like washers back electronics, the little holiday sold for and like seasonal into In and and housewares, furniture wrap TVs, even little gift of items. we instances, been the items a home and items some fundamental those

hours you masks Xth, required the hour social still overall May with to and in and to morning we’ve employees Our as and Warehouses mostly in sanitation distancing guidelines seniors Since for wear disabilities. have November, remained unable XXth, and with may additional recall, to occupancy. those since are on regular some limit open to wear and following warehouses are back members and persons required for any have we mask. warehouses jurisdiction, we’ve facials a an

fiscal into of year. some QX And extend well will initiatives of of this course these

will Finally, questions January closes. we January our Xrd, Cindy? market to in the results for and weeks Cindy. five to Xth turn Wednesday, sales it that, it press ending will terms I releases, I’ll upcoming open announce up back after With answers Sunday, and December on of

question Morgan of from Simeon Instructions] [Operator first Gutman Stanley. your comes And the line from

Your now line is open.

Good about you everyone. merchandizing on Hey Richard, Christmas. following of to Halloween ask plans talked wanted the I afternoon. and some around

begin some to when going lap inventory to you I don’t are You probably guide, in massive pretty planning XXXX. growth surges get purchases. into know you you but are

wide as in thinking making manage a that don’t markdowns you ask have spoilage of any of some food of be the seem to wanted fresh the I pretty outcomes? So the I sort And happening. far with and are guidepost gains how don’t you if about to know range as you

how So lapping do how you some well? plan do – you as of for think those

time was we there and in Well, that first when in results. frequency and things will different I February, a three people few in The we is and or surge two If meat weeks May, March, many basics were out view, and questioned. COVID from mean, and be cases, that. the week spiking then beyond a last there periods our course, recall, And into were in of paper of and and running coming sales big things hoarding – alike. that and like to there everything were some fresh poultry supplies goods, water at to in there plants some were as issues and and of April, cleaning plants protein some

it’s so, And project hard to completely.

extra that we inventory to have of little out key go and to cleaning goods can some late, of things aren’t where and supplies. style going build paper tried started like we I think a the I of

deal inventory extra creates We fewer continue to work in you easier of with. we Although to we’ll our that or volumes work little with deal fewer own that have next and in other away Arguably, then in quickly. it it’s its cases, challenges – spiking pretty cases, you had given it. some sometimes. items Look, whenever to goes sense to around and get a suppliers huge a rush

some I sales like this sundries, strength we and not beauty will of side, if the and think and things May and a the the items. challenge when basic be on home just and bit. health And those degraded will non-food spending also to past bigger dollars. improve you aids, of people is foods some paper items year, again, goods may and types and foods Look, key last those year of be for post little fresh and saw but some kind categories in things those going essential

Some things while and going take going in terms being everything food is better a up is that a are everything degraded restaurants not may and happen one not unlike day get what of going to to opened. standpoint from was

so, from good feel that I together think, format it a we we’ve are we go members there. got our And serve and pretty and good we’ll well to in

events, know And I don’t as far been. road they’ve how as, I don’t I prevalent know, shows, know,

you more a going are Your an Grocery, cadence about of are are change area this aggressive? the to can lean mailers, taken there of that stronger? merchants for huge the Is to you’ve you get things thinking year? that upcoming how prepping the curious Just year. share amount are either into

non-food even ticket, mailers, of are we relates some it I some am do or changed big promotional of these as of those the – mailers been forms to Well, big the ticket not sorry. have that online type like because

like last size supplies, cleaning some big of some well changed going items sales the of items just and bit other in those We had like in to fine paper cases, months few in as less it’s from little items But are of cases it’s we’ve a mailer. put always eliminate there that’s some that some that cases, done increase. we’ve things. been goods, In those in. forward, the not Some the in that’s a

at I pivoting good new think we’ve adding items. been pretty and

have cutting I big of we not but may like a could examples do of too while and things would they to. were running back, we decorative out some are think we the went cuts, we deep of maybe earlier and for – little – into those Christmas, have

fundamental also brought though mean, are first I in lots pressure because found we the are barbeque think well, to don’t doing basic the items. success and they And I of buying home. grills We market. gifts probably – for people in Christmas, essential, washers

Yes. Thank you.

the your of next line Mike comes D.A. Davidson. from And of Mr. Baker question

Your line open. is now

you holiday any into come Hi. customers sales spread Two get trends. Thanks. chance bit curious forward some in on a in from do could said is advertising I sales pull holiday you out holiday Do much had more could sales of think that? questions by these that second And if I December? of question, you of part think are was One to a really. your out stock seasonal have of made bit then stuff? aggressive little the have think you seasonal you on their think to little items. been quickly November early, up a you done the How little you there the

not you. Yes. the what feel of November, going but in only forward they buyers, have some has online even were there to on not general out December, about Thanksgiving but and merchandize that of all, Costco-specific, about and and week into sales Well, from what’s of definitely November there articles overall, just been and the first the pulled talking

got forward. certainly push kind of And of some that so,

there In bought item, or terms this XX% year mean of we instead I where examples a are more some less. of things, XX% of XX% given buying

have we a in It’s So, could number. a little not order just bought not half. we like dollar our we We sold meaningful. don’t retrospect, a still that I bit probably cut lot. But back more. by probably have

been our For positive. have to our very overall comps negative say, there strong. every another is Needless

quarters? the increase, range that acceleration acceleration better nice MFI, few more last it ask I as Yes. X% from A X%, unrelated than has question. add X.X% came the that’s That’s where been. Any there. I more, if fair. color And in could – guess, got one The to

Well, I think, in terms shopping of frequency?

No, membership fee income.

No.

Correct.

I am sorry. Oh,

few part a think year we earlier. first opened of of didn’t more a I looking that’s most did we it. question. Without hear deeply, the that I than probably the units Okay. Well,

Okay. color. I appreciate Fair enough. the

you. Thank

Grom Gordon Chuck And question from next comes your Haskett. of

Your line open. is now

offering, remind us it you categories of Richard. Hey, profitability start thanks. terms may relative what the Hey, you online more? and of where of also business good into And to total looking your going afternoon, mix in In store? can level ahead, stands

I’ll and XXXX items. we’ve mean, we high it, warehouse, Well, in you, of in I about X% sorry, course, of X,XXX got and it’s active tell got Online, single sort in-store I it’s plus. typically of sales. sales, call thousands, of somewhere about am the digit terms

Now like the is include don’t their we to in shop. into third because just Day customer , or that contracted any number Costco party as like Fresh employee I other mentioned a Same coming coming Instacart sales the employee like shopping

But add could that. a X%. you what in of to bit we call it’s that about little terms online, So more

think and it for way through the saw it advent of XX entirety, you COVID. dramatically in was the ecom of year the I percentages fiscal X% was course, when jump half increases with

about core then, talk profitability. And

little profitable. a less ecommerce Overall,

profitable. it’s category-wise, got You’ve

include you’ve don’t highest big our the categories category-wise, like in of fresh, penetration. some the merchandize that business of – of margin got components a terms got gross in way like You’ve apparel

terms shift past also and year, locations of growing types out was lower of which as to year. is the And of ramped past had and the up we are is this the getting simply overall margin the are comp year-over-year we’ve mentioned average of of customer inefficiencies that being a the percentage with the closer earlier, profitability I upgrading margin You’ve and hit they sales expected in-store business the – we so size cost helped of penetration over – adding in But there Logistics, continually fulfillment, investment a it both it’s in bigger some Costco calling so we are got as the fast. recall, increases We of over electronics lot. as Innovel, ecommerce than of where has much examples. a grown Certainly, has online, business to and been because this it. a as so online to

just the pardon the and follow-up near-term it. a November you then, of the of the you just back. my back end started And still question next to when any orientation at comp off. the if curious think I why sales if strong, it’s month, is and albeit, there have look revenue Gotcha. in But at fell on on fall-off you look to when bounce And learnings trends then

is, and items think I is, I items – pull-forward. people some complete marketing fact mean, it’s types best is earlier guess of holiday those ticket November. it’s the in bigger I of mean, our

Last was month. the Friday, whole it promotions and for

Yes, Bob, in not promotions else of everybody Black year. promoted we here And that, too. More there this Friday an out month. mentioned those assessment the earlier things

right. Gotcha. Thanks All a lot.

question Michael comes And your Mr. next UBS. from of Lasser

is Costco comps. simply their think an goods its buy whereas is? moving acceleration Why you Good up evening. holiday call the coming Thanks When comps, are at do entity, are this in this seeing my customers because you others your – might consumables on and ones and compared look a getting retail it’s the lot a loved for into people seeing that gifts some the season. in is taking items? deceleration Is question. considering sales, Nice which consumable be most their discretionary for to their members rest of baskets

money in and people We food in home. in for coming buy being spent and that, the the normal to for door. that definitely spent being in our essential beauty think is items recognizing given more the is And alike. look, are and cleaning things years on you clearly view, That being in things perhaps aids other gets health certainly and

has I regard. think as in that that helped us well and that have We

Okay.

comes helping the So, down mix it Costco and to that really results to to consider. really

done box it hopefully, at open least people I big wide good relatively and is distancing environment safety part think buy a feel into social pretty like to safe think a of we it. and protocols. job of other I’d where coming we’ve

just strong it that “gross have able be able of the seems margin should we it to? better than the sales And should posted it function it’s Okay. is that allowing sell through to … been right Costco to a Is increases” Why like might. it

Yes.

fresh with labor of sales most is improved where brightest components have think productivity. and spoilage strong colors food two which cross dramatically, I it its you’ve that got shows

helped. So, has certainly that

like One other seems thought – it, it on sorry.

less promotion. Oh,

I out is, this perspective. promotional Michael other, about activities less there. There The has an been think all from read you’ve industry

still and because it do the by be were you seem come in we not well, over kind getting the general, expensive. TVs While great There down prices thrown haven’t board they things, because to. to money is at manufacturers values always getting on the being bigger better, look of And time. when these promotional across have just had less at they

think some I had too impact. that has so, And

helpful. hope I holiday. you great you. That’s Thank have a

You as well.

your next the line Capital And comes question RBC from Scot of from Markets.

there. Ciccarelli. attempt guys. the No, Hi Scot

of some of doesn’t are like but – them, or members perspective that the website only, guys you ecommerce look believe I . it sell or for all from products a via So, your not

not coming assuming are difference, – So, just members? it’s your how ecommerce of from much a sales

well. Virtually all. some see be I on prices. we work and believe items challenges the you to is the with in part want sign as as We our ourselves of suppliers to to have able

I it. got

shipped how ecommerce the through then, Richard, what’s today update Okay. sales Costco? are of from versus vendors your kind drop delivered much regarding And being of

than less little drop XX shipped. is A XX-XX. About being

holidays. Happy it. Appreciate right. All it. Got

you. to Same

And from next Karen question with Barclays. Short

now is line open. Your

questions couple ask. Thanks Hey. much. A I very to wanted

COVID wages. and on just first So,

cost So, the $XX guided. week breakout out impact obviously than a you’ve gave I on called that higher number, on was goods the versus that per SG&A. the little the us you XXX think But of a

on last would I about the and give quarter, presumably, – been, have then, would component like January quarter I quarter, And – the can you Xrd in that’s a would gotten because think does what about color that not – that $XXX might asked been us the next be probably million. So, what wondering if wondering other is like have delta cleaning to have if then this to undate date would to in assume. it because how little

to cumulative is now we’ll and of Well, but to end have hours round Needless – there of out. I But chunk the big the rounding at XX can’t the the of is that, a find delta. biggest to day, it’s XX hours. down more comment may honestly up More say whatever. I on difference

Okay.

the… We have

the then And component. cleaning

That’s relatively small.

color on little a relationship. of give the could you if the expansion wondering am Instacart I then, And Okay.

the on to of You versus non-shoot markup you a a markup? added items for obviously would and to the on breakdown non-members third-party. the is on with then you’ve respect listed versus what a that SKUs that shoot be color give on on what Can give members that couple

be Well, specific. can’t I that

continue items. continued over There the four three be lower or across some them discretion and lower last the to years, is we’ve on We board the to effective average some work whether to to on than markup it’s fee per is whatever person delivery there fee per other average, per but to or spending both higher plus their includes Instacart. markup, fees fee a here, be an some monthly monthly or that is which

shippers the bit given with cases, third-party – demand that mid issues of the smaller there that many of in, percentage-wise. with we the is number shipping, some always for markup that unique out and quite – that the during teen to maximum than the some year in a a than that As items high tray. cases, on the capacity smaller end In some high to on is there those given coming the – issues we’ve Instacart added is

then And question. last just Okay.

slower slowing space tough at I traffic increase, In terms of like think of deductibility new seen of And to the California. because in year. I we in you thoughts terms historically past in of you then, you’ve the any think timeline, parts seems XXXX actually terms that on terms obviously, into timeline of would fee the Is it get about. you’ve MFI, tax next January there done the your the compares and in how looking think, in may counter of – intuitively as when would be membership traffic be

on that’s color great So, them.

know five raised historically The at for has been it’s membership you basic started believe mean, the we years, executive XX and and raised the I I years. effectively say the XXX then roughly fee roughly every could $X we’ve X.X be years as And X, Well, XXXX. I last time it now of did in was June-ish XXX increase originally XXX. to was

– either that XXXX. will XXXX, of years it might the it XXXX So be but But five it’s years five was of years from one look. June we or June then

it when have to have things or that value we’ve at we’ve been by – greater stronger than mentioned at heavily dependently when enhanced and feel when are or might And somewhat has it of been it we not very improved when suggesting thought the a certainly but five look economies value not, and else. we am – and at $XX. multiple hit more the proposition I it done that, been We good the look time the You much whatever sales will respective at done or we’ve $XX. $X the We weaker, or get sales than $X and wait it that. much or tell. Historically, about always membership

great Thanks. Have a holiday.

Thanks.

too. You

Your Chen Cowen. next is question of from Oliver

very you much. Hi, Hi. Thank Richard.

role about vaccinations, will Regarding with pathway versus vaccination, you ahead Thank also and as we do pharmacy a in thinking dynamic that forward how managing hopefully environment, see are cetera. this sales et you. look a in your to to you play that what’s inventory

are the we I in and the process. believe the country vaccination – of there first phase

which But not road. X I that. be the a will We short are believe Phase just participating down period in

Our pharmacies that the them. part are pharmacies country vaccinations be for providing many to will the be the throughout of service of going also

not is cost little items some no But very short, we in throughout And and only extra items, Phase currently. this lot. I of have continue the that of now, as few towels big seasonal to only our risk in positively there at we plan of certainly a times We how of space sales our risk after while down is in is inventory we’ll are weeks having very the planning. cycles. of for X first I keep is plan our we’ll expensive weeks not payable of interest think do think a push in carrying a available, the having inventory risk on the don’t them. of more extra But be see markdown turns Alaska to the it’s overall, of when But day, round. always the a tried few A supply. obsolescence we – mentioned, think not little there the are that any that extra risk I to but of bit. on certainly which X kind build in State or is inventories, managing times Phase in We end I of initial country infinite, earlier, paper up And be But it. lot terms terms been is of will example rates. in the or big those of a There low given isn’t right we extent of change of having I the

… Ecommerce Okay.

a inventories X% a can increase sales a you a say pre-COVID of saw as were inventories going comps, – more When than a percent number, up. we as we inventories comp that whatever was. of in of X% as I the number comp by enjoying to sales the percent the anything. percent When saw payables was big payables

occur an about implement may helpful. are implement? then, how as for or Got as acquisition hopefully catalysts it. rates on major ecommerce, new rates That’s that engagement And are the online, are of to topic And going longer growth looking the seeing what well customer that innovation as evolve you that you of very think growth we think some reopening eventually? do as forward term you will you

want that progress Well, god our will people business by to impact to food couple the alike a out beginning look, an and this personal the years, hopefully vaccinations next and back vaccines get more big have of will. through be sales? the get will and restaurants or course, will summer chunk going standpoint. most Of and it during on this importantly today back And over process willing, and things from of even to a standpoint with a and normal starting also we from of

this will sticky. be of some So, positive

from be members and the sticky of we’ll go there. Some will new

into and think service they to is best attributes items we members our us. them When – from. of quality come of they – loyalty, we of want the where a prices think items great great likely is lots there I are value they with in, is big to Innovel ecommerce the attribute. and start value acquisition certainly, and those some of more buy items But in on items still we driving great the and value and and all what warehouse. a and biggest member for those are to we customer great terms are great the that’s that ticket having the helps quality come ultimately, trusts see in about. merchandize that, the view certainly, We certainly our And

and total? Costco the business forward that to part, on last, relative the going the headwinds what logistics, of Thanks. that model Logistics we And should size around terms as know we helpful. about margin that in dimensions That’s of

margin two is year for QX, points and in a hit. Well, reported data basis QX about, I it which fiscal margin an we’ve was point the basis given only we in you this was year-over-year eight new point think hit just six

constant next there quarters. over will guessing go, in games that the assume several be that improvement As

certainly have those can and year items it knew that any and installations, and it. first it’s decreasing indicate doesn’t a get bought we delivery it and earnings able do a out year with we at would think it retailers positive negative. last home this we we into of standpoint done benefit perhaps about That in and of that worked end that it So sales – the hopefully those be dilutive a have for the But be the quarters improvement us their we companies do – with that. to But mile be excited own two of increased from when the companies little an are the the won’t to the and include margin that. certainly basis associated and that second the had day, certainly for would in from a what they first we infrastructure the on

holidays. regards. much. Best very you Happy Thank

Same to you.

Fargo. Your next of Edward question from Wells Kelly

open. now is line Your

Yes. Hi, Good afternoon. Richard.

color freight. I and headwind could you maybe March. about on that? coming color little an talked was mentioned You the more Any hoping behind then a you in provide more improvement just

really. Not

a there it the what’s and with Before going things each of senior in just departments call, the the on. example, people other as on that, I’ll was merchandizing is coming some sit or from Head And of by and Merchandizing and down way get general, with shortages. Asia comment an color their container the in

ordered – are four its a our you’ve cases. to in may of get is is some have ports want it we Again, ship. in put the and particularly. sailing two West for to when not on take – Or on here but you moving United things lot days on some once two the thing inventory full ship not big like us days They’ve to floor. it’s you ship of it The it, fast, extra to to Coast so, States in the the few on the day you go And delay. may a get want to same on to mentioned

will So, said it’s big was, and not March. improve a what the said not February, probably deal and I comment until

threw I – out. I that. from any impacts what So, that’s Not more just

had you pick Okay. we become digital had at And adoption. question strategy just up accelerated I of then, on a updated generally. see across a ecom standard Any just a lot kind offering store. of digital online probably thoughts on the I buy and mean, and industry essentially

that to all. at Just curious whether rethinking as you are

rethinking not it. are We

to scratch bit. heads and this have at our to any do at continue But current juncture we it so. plan look don’t a We little

probably it looks up And I quarter right about quite was just the then that double. and for look Okay. sold OPEC’s do fuel, gallon then per gross quarter? data mean, lastly what a like at maybe profit you, the this I Is think this gallon bit.

– not don’t down margins were on a terms give can’t few down it’s they percent But as up in gallons We quantitative a year-over-year year-over-year. double. any much have number are as sold you of troughed were right, were a there. the and I that you – ago months and not and margins, down as gallons been

Thank you. Okay.

Horvers from JPMorgan. And Chris your of next question

good Thanks evening.

are season given we as particularly Christmas progresses, question. to guess So, mortar be how wanted brick get for about to the Christmas, big and follow-up the thinking surge. merchants there could holiday retailers the earlier time close a in some was to that on the get pull-forward time think the curious that cut-off I

seen pull-forward. I no just like think started what a with all other you it’s saying and retailers that day been are prime

Christmas to So don’t anything out expect of – unusual anything too. the close

what thinking. are your So, curious merchants

of – quantity I bringing it’s out we was aggressive every are in the would a of that is to few And Christmas paper going down not But gift extra sale is there to – running before same of merchants sale pretty the Well, again, They token wrapping this. pull-forward. some that, feel of the it you marked again, be say, extra is two to some that not wanted certain stuff want. seasonal But end that’s is with up and kill you has in feeling SKUs items weeks still a fundamental not big because having day end or you way. few SKUs if a after the world. that

we going our that this. dates Recognizing we lean it the a That well. and that there that, longer see. end experience think at mortar it to are always the see do should could and pull-forward you. of what some sales recognizing will we – our I particularly the the help it done think over next assumptions basing positive with have to I be of got brick we little day, relative two the But on because weeks, to So, overall on are are shipping. can we’ll some That we be in-store and

to called margin travel the of big You as out called you – that? it the there. there impact a haven’t of terms something prior, in then, And out around an maybe it. was accounting Got and Is there counting gross it’s expect reason? Is to and worse of we thing. the would there and is ancillary for some business. to that seasonality because just But get that irrelative sort things other

of – them can rank we you just you like got dollars. like – got you the to is put XX-K, do a order to to What in in

sell of sales the rentals, like So, in the is coast gross high simply acting that it’s sales all a gross and dollars whatever will margin ownership margin business it, very sales. Only car of or I you curate plus cost our of or and item few margin. are margin. that But take am of have To and That’s a an that X%. case of of little $X,XXX hundred a are or as make broker example or up, there you where equals this weeks like business. first no we percent ship making travel, chunks thousand a extent $XXX,XXX very when something crew we XX big of you

spiking that with ended a has little would business out a the to them the of those of show as quite even as in the be. dissipated it’s occurred December. that cancelled So, we as last bit. COVID in several life a summer the life bit weeks that some were started are bookings of to But Christmas being some for of you expect And

harder a that it’s order little the So, which of bit. – it’s rank hit one them

And last on to gains. relative – is, price wallet inflation it. them home XXXX go home what of the and you Got you you and peers club do are at and how to peak at question this – Where gaps sort where timeframe, if grocery, widened? lap now? have then, they some lap you back think see food I food

You on seem to get price. more aggressive

where want the your thoughts that how just to XXXX? see now price you are into and So, you thinking gaps about on get

their our issue limits at good shops But compared are that’s at comp clubs pushing items as for very mean, and further. we you now. retail don’t well an we formats, if competitive we look I to all and Well, mote our pushing feel specifically right comps at the that as think warehouse, the traditional we will. certain about ones keep us on And

Thanks. a Have guys. great season it. Got

Thank you.

Robert from question Credit of Moskow next And Suisse.

question. Richard, a giving have could as slip drive of as that usual guess, they you the more promoting what I discount body or Is so, many supply manufacturers, you Thanks way? competitive point because Any other would – goods mentioned it? environment? for And maybe don’t not much, not the intense think that the to. they are if as it

to and mean, you TVs, happened Gosh! When else everything electronic know. of both I find everything strength it’s out, strength enormous is items, demand I’ll and in course and if things capacity of in those what’s cases, overlap the some shortages supplies has gone I the some laptops going general let up for in in the with between and air even of pods – more.

it’s to hard say. So, and

in. the thinking you that? was have Do package on some we’ve promotions any categories of I back insight heard into lines Okay. putting more crude,

don’t. I I sorry. am

Okay. Alright. Thank you.

And with Melich next Greg Evercore ISI. question

Melich. Richard, hi. Greg Hey, it’s

I me. was think that

So, guys for I and up showing any there are growth up am showing is two see there? was there picking One, you seeing and grocery questions. less What promotion. we CPI inflation

Very, very, very little.

that’s like So something but X%, of other it’s nothing we X%, out some those there. numbers see

Triple X%. verys. it’s It’s low. very Three Oh, very, not verys. even very,

the special dividend, keeping cash, it it On getting and and done. special congratulations

$XX You What’s either on the of number the under to run be back others a you side billion want it. even right during with COVID cash. should the that still business little of or

related is is $X.X billion that’s There to alike. taxes countries billion different upwards related insurance that of for card a keep Well, the which $X other $X there of withholding There is to you that whether is it and chunk that credit of bring captives because to a is it. billion whatever reasons is to receivables that last be your under and in mind debit billion and want back weekend could $X just overseas whatever $X or billion.

could COVID may of end still and done answer we the mean, someone is the why have don’t I announced at economy. going dividend now, asked we we with right could So, $XX rush? what happen after but know have to the year happen the day, what’s next question more. the we The in

pre-COVID And – But normal you little than a too. that’s so, probably have will. we’ll more cash than okay if

But we levels just last, are we today? the us the average that could before are helping all or The that? that then, – where you – sort for COVID up, of thanks now what And rates know there.

You mean, the U.S. hourly average wage? .

Yes.

approaching right just I the think either – U.S. well, in we $X the in the or we $XX ex are are average above

in the $XX U.S. Excellent.

And so, base up, did that, completed – when? you was – for that and the the that going rates changes the was

believe, March In last I year.

March, Last

it believe XXXX. was. at that Whatever for pay March. start or the was period weekly of March. Monday period was the of that that $X was Last beginning bi-weekly across Beginning board. And March of I March.

top that. COVID the stuff on of And Right.

Excuse me.

that The top COVID of rate. was actual the on wage

Yes.

good Right. Great. Got Well, holiday. a luck. Have great it.

Thanks, you too.

Rupesh Parikh of And from Oppenheimer. next question

open. Your line is now

Good evening. my question. Thanks for taking

behavior return COVID pre-pandemic. Australia wanted is to the about whether better be read of now. China? normalizing infections, I I back How Australia those am ask China, countries some lower markets where So, a purchasing just to is to in than – seems you guessing, have maybe probably

They both comps. have stronger

at guess, forward perspective, look carry have carry From where I you maybe a they the forward shift if the were seen mix? pre-pandemic to you

Well. in most front And me have that - comps normal, of look if currencies, in are better. by don’t when back unfortunately. I detail we at little country, local a we I countries are in not to

Okay.

was behavior recently in Okay, great. or stores? and just had your comment And recently then, more California consumer in we just you given terms you U.S. curious in to has just seeing if in in spikes seen I of put are the on more changes anything infections the traffic can restrictions place.

there hear weeks waiting was I’ve to the was few it everyone what was terms in that is, a and There started ago, in waiting were only that lockdowns. to - when in. of The new the noted California, is when people a thing going coming – spike everybody was for restrictions in first shopping or be California,

accruing. particular when was a over had we couple strength of more period week So, spiking

Have great you. Okay, holiday. a great. Thank

Thank you.

two We we don’t questions? Why take Cindy. two too. more You take more questions, will

Okay.

of Your BMO next Kelly from question Capital. Bania is

growth pretty to here. markup and like your that for fitting for know one or seen to now service. you’ve you’ve pull the that premium Great. segment clearly a partners the just else this online in membership continue maybe could of pulled everybody your pickup to at your wanted Thanks lever guess, to by back does a that’s quarters, store seem scratch seem in that’s there, it pay just to But been base question. you head, Instacart me with Richard, for said willing several given buy you a day be but does that retail. third-party massive that I and much already I

pickup So, if a a I for or just type even point higher for pickup markup am like even a curious service? membership type price thought about you structure

to discussed. about Well, as those conversations are relates topics it, that it are general

a is traditional the are prices lot of and can you now in there One same buy for. pickup buy and online is the come retail challenges at in the right store promotions of which it

the So, it to for somebody is you up. paying for it up storean waiting and pick picking

as over has to any but people to or am go the as – somebody pay to we with either the haven’t all we forth decisions looking for it. trying made you shake things, will that to think at out be customer. time I those company – I not are

from quick a maybe of follow-up, mentioned you sales just the percent digital ecommerce And households X% engaged you but Costco Okay. your that maybe membership the are share perspective, just from penetration a perspective? curious could just ecom if with

We don’t information give out that yet.

Thanks Okay.

As you might expect, it’s growing.

Of course.

question last from of the [Indiscernible] And Jefferies.

joined members cohort way slightly follow-up thanks is have Rupesh’s ask afternoon, which looking of a earlier on to that new Good for really different your that sticky but of Thanks. last I value any lifetime everyone. category at And squeezing it the might want question, me in. just bit you that of be give year, distinctions quarter customers or a Thank going third into longer distinctions forward might or you. a the more bit encouragement performance be mix those future? might kind members

deliver lot because have there go through we What serve a up to we fresh not yet. can or COVID lot But recognizing that of them Instacart of cans sign information because a online. them yet. of – and and food don’t We on is some we that

Okay. Thank you.

have Have good a and a you to and on XXXX. Hopefully, happy season everyone. you thank healthy better day. Well, holiday