Costco Wholesale (COST) 10 Dec 212022 Q1 Earnings call transcript

Good day and thank you for standing by and welcome to the Q1 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] I would now like to hand the conference over to your speaker today, Richard Galanti. Thank you. Please go ahead.

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

a million $XXX $X.XX diluted due by This the million, share $X.XX IT benefits year per per assets Forward-looking to the income for benefit which up were was billion $X.XX earlier and for of to results a the tax of year to of sales release, billion premium for diluted cash statements ex the an related X.X%. as quarter U.S., reported or $XX.XX quarter plus weeks, first or reported excluding ex at by FX X.X% quarter was date and wages they the to which $X.XXX diluted a quarter. Same-store certain the of $X.XX impacts billion up gas the the billion, And year Company and XX.X in sales XX.X% deductibility in press per this the reported fiscal of the only XX gas FX, as operating write-off speak a dividend follows: XX.X. first stock-based of on $X.XX $XXX up up compensation comp received statements, XX.X last quarter year at million compensation weeks related ex and of Net $X.XX in the on required reported and of a share. as came $X.XX or are share. does update or included In first a of increased Last the e-commerce $X.XX XX.X% of international from as well pre-tax FX today's year share, $XX.XX Total inflation year. and for basis increase the reported participants compared $XX million the Canada include and made, special reported XX% not last for of share a and $XX per cash incremental except the ex per quarter or XX 'XX, Net and FX in company's to In XX.X% up undertake expenses X.X%. plan which XX.X% share stock-based hit per FX. a $X.XXX for law. basis COVID-XX pre-tax, Other company gas $XXX was the we these ended XXst. November a was inflation to XXX(k) gas

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

X.X% worldwide or during the U.S quarter. was transaction average Our the X.X% and ticket up in

plus FX, worldwide the and up ticket inflation the X.X% positive ex gas the Excluding average that X.X% from plus and impact was U.S. in

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

X.X%. X.X% Next the ex million, from $XXX income and XX million on figure. increase X.X% the $XX be have been FX, year's quarter fee up the would income of million statement. million, the increase in $XX $XXX reported Membership would last or million

The the a end. of XX rates QX rate renew week three QX auto also at quarter came benefit as a of up renewal have members earlier improved average than rates, year increased from renewing figure end our executive Canada In XX.X%, rate the well as continuing QX penetration of worldwide on up XX.X%, at more end came to renewal a U.S percent from percent lot. and higher and in three in of a as tenths who at rate are terms tenths at rates which weeks -- ago members the well from at members renewal first non-executive XX

holders, from ago. QX weeks total represent our of million, the of of end XXX,XXX paid first little a terms The end, during as million XX of increase million, sales. and our end up up million XX.X was members ago, as members since In number paid quarter, terms total total an from the households QX members a the members well end. quarter of households of a cardholders $X.X at in of XXX.X over At weeks XX.X member XXX,XXX and QX million, executive card XX.X XXX.X executive XX% XX totaled XX% at

lower our Moving down lower excluding was basis year-over-year basis X margin quarter year first year XX to for the the gross inflation points and gross line, reported by margin points. by gas over

year-over-year ask numbers. do, to normally jot There you I then inflation QX a are year-over-year I QX. without down reported both in columns gas two few and As in

Other year-over-year margins X a item XXx columns. -- First to and both points a basis point. X% gas X and and in both reported in down businesses and points LIFO inflation. basis Xx XX are basis gas core points. gas reported basis minus basis would down then on minus be other merchandise, basis points three Ancillary and were year-over-year line basis plus columns. Total ex gas inflation. points XX minus two plus without XX XX inflation reported plus plus basis reward minus X basis on

ex lower gross component points in QX merchandise gas up year and basis last and core Recall XX by up was the XX core XX basis gas reported the points. points of margin inflation. ex year-over-year XX being basis terms In

the the retained a core. So improvement years in from we've good ago portion of X

spoilage basis on food that the core sales slightly In slightly margin sales another the quarter. the on in pandemic. our year ago margins lower basis by non reported the of outside of lower price LIFO I in plus our QX was the a XX and on inflation related Ancillary million and our core in year-over-year a a COVID mitigate inflation. the we Fresh higher to gross X can, strong points our points year-over-year. best charge reported quarter. reward in also by e-com, think Also foods and go had on sundries. were a anniversary lap that travel and which by $XX to lower was X increases margins year all LIFO, point X% of manufacturing began basis labor productivity year cost continues members a of exceptional of quarter. to product points. XX inflation, was ago. better one members,. reflection basis up executive first fresh XX gross to the basis offset X again ex wages that lap with their was business basis slightly own the to softer And occurred results they costs -- gas and of a is as happened lower a the gas the excluding higher of the the -- margin by being low sales and COVID bakery higher the of sales year a particularly we year-over-year year number face related up from from other our ago going Gas related increased penetration the This ongoing primary quarter and terms to a many ago, or related pretty efforts by core portion to were That and the inflationary driver core businesses like into departments, points, core we're our pressures quarter, in as on that lower good. given basis and foods

Moving to SG&A.

basis year-over-year and gas or XX two quarter inflation, basis points was jotting columns Our XX of the reported points SG&A by in again first numbers. down lower better excluding

Keep ex main $XX from that weeks additional just of was XX, again ago, and $XX inflation column basis increases core gas column wage Central, ex effect being inflation assets the $XXX the lower points, earlier. or categories year of mind changes Central points lower and These X better expense in this employees. points. by better, and that basis QX off Total the Stock in -- ex to reported the by latest by basis X. X inflation. of October are inflation of from million million March our basis by consistent in by the includes inflation that's weeks and in basis The terms by gas better just - past reported on into there. better of better XX XX then year-over-year. the as our by again gas Operations stock XX $XXX going in by X for gas wages and comp starting and XX X, basis $XX by no better and -- two XX result second XX being in hour the lower $XX $XX of we a better ex by This mind, or write the better numbers. permanent this it or mentioned dollar COVID and was gas IT better of weeks and in compensation took impacted or last lower points. by X gas million other points of better gas XXX inflation, And QX. surprises the two X better I hourly XX. First ex October and SG&A reported XX and that XX XX starting inflation or included other keep basis, columns, worse those by XX little ex and weeks worse X X inflation. little Again, and by a I better -- better to a began XXXX. increase by wage the went mentioned Without

told, in line the first XX% quarter for first by 'XX this statement year This is the to billion. operating expense. last the pre-tax This billion up year Next income coming year-over-year, the quarter or reporting preopening income at income XX interest Overall the fiscal billion in income, year compared XX and on million $X.XXX higher and Below X billion. reported year the was year. All of first expense income, $X.XX was last in in increased XX% quarters year rather, quarter million, million million of expense $XX income in compared the the $XX last due $X.XXX of first in primarily in quarter at coming the was $X.XX other quarter higher. quarter FX. Interest favorable operating in the each 'XX. interest to interest quarter

compensation stock-based the tax benefited $XX of of million first year. in treatment QX XX.X% to taxes, last as compared and Again this from the earlier. quarter terms XX.X% tax mentioned our In the year year $XX rate tax was income of rates last years in 'XX quarter. in both million

Additionally, to the that tax a dividend, payable rate XXX(k) deductibility participants. from benefited company's the tax plan last year's of special portion

rate tax and effective 'XX, note. to excluding these fiscal XX%. items is discrete XX% For other A few between currently items of be projected

terms fiscal for opened reload. of know, 'XX, including expansion, as units to you we In warehouse XX

a including openings one relo, increase weeks a And fiscal during of XX that opened units So ago, So 'XX. quarter net X. ended units couple of we of net this nine

the For -- would new units, year, which also XX open print units, we plan the of XX be X remainder relocations. and of to open

X, as buildings 'XX December our opened in Spain. followed morning today, opening second our well building past days. in all Costco two opening our goes which unit one this yesterday, planned. the and fourth in second in We a Florida that opened seven if in -- It's by France U.S Saturday as in as last been busy on China, So

fiscal $X.XX first our approximately quarter spend billion. was CapEx, Regarding 'XX

of Our $X last full estimated more CapEx be spend investment increase largest coming year entire CapEx just warehouse $X.X international in from an The $XXX to fulfillment and spending have than year's million increased operations. areas and for new e-com figure would billion. about expansion logistics This represent increased is of billion. over our

the a terms year increase quarter ex of in furnishings. include over FX XX.X% of of terms ago jewelry, top the course quarter. in That's of on departments home Stronger first the sales XX% e-commerce, percentages year-over-year. tires year and in plus increased In

consumer from up Our in a to strong also sales is and etcetera, a the appliances, largest was merchandise very terms single sales TVs earlier. year on digits increase everything department of majors, which in high electronics

update of to drive and continues on logistics, In sales. an it big terms our bulky Costco

than away over $X average the XX% taking from And e-com about For the quarter, more per for project Costco big U.S and up logistics be were old bulky week. represent deliveries XX% plans. to million installing something our would year, we more now during Average the quarter than and anything shipments. -- and off stops, the stops XX,XXX dropping of with which

e-com in mobile year, the Our full logistics For app.

the to far quarters of We the we've and few the Header the improved We improve site I've additional and Footer, thus features about continue as calls. last talked app menu with redesigned quarterly layout. updated

view Our members receipts and app desktop. to ability warehouse the have online now both via the

Our to linked. card is co-brand payment. now for now Citi Visa used and can can linked It card membership digital the be be

the Labelling Our to able of more -- at in warehouse in signage Currently reschedule even well. with fulfillment particular Canada. screen the have be out a we methods. fulfillment calendar better be XXXX. item calendar e-com to e-commerce fulfillment new for members it we nearby to be number U.S., more We're that rolling of see much now easily We're options, Members easily upcoming year locations easily more deliveries U.S the availability the rescheduling delivering touch new item of new first year. a rolling will particular -- and the plan labeling during and double e-com XXX at can same level. will video able returns ordering with goes lockers. in than and and and are --- as e-com out warehouse Same kiosks day, half of pickups the easy a in

given there of terms challenges. yesterday XX and online, factors a under XX items in our chains cost e-commerce, outlined we the ebbs it but patio. but packaging the example that a shortages overall, we've received Costco port curated with materials, Still and well a challenges, called bit. it's it's more feel XX and COVID X,XXX are bit. perspective, chain road a with various on challenges, dealt those warehouse and and items, next, longer instances, ebbs them were pretty Costco inflation in we calls, small, some suppliers supply early key are and a program truck components, mentioned, way a press extends of XX is Overall, some lead yesterday ago late packaging a chain days less In delayed have quarter Pacific shortage Virtually percentage little limitations labor From challenges on garden Coast. impacted. an and XX% some few that issue quite are many on the average just still container and call. of late. early out days check lower please similar others. issues in product import times, offering items, pressures container items, than flows. shows, currently, but In by and A again, it values, all lawn About simply flows the like impacting days. We've disruptions, earlier I weeks departments of driver even raw many and arrivals terms but there's you our delays, season, few some so ingredients, just of last of containers improving Chip still a delayed the But pressuring an than few still chance. inventory growing, supply think many I supplies, be might include when more are supply Each in of the ordered in cases as we actually quite

the as Christmas, mitigated may won't as product extend it normal and quickly. to again, in pretty terms we're sells into that some pretty in staying and it seasonal as in increases can. it feel the make time, all thing, arrives, as inventory, about same in but possible, work pretty we about soon the and As to toys supply good pretty we've beyond fact, before good best on issues, seasonal But and of it. best -- continuing mitigate -- chain despite to feel stock moving And cost price fact,

to of demand to what told and There of the Moving that our was we higher it's out have container pressures port and during on in seeing, freight on supply we variety others that increase costs shortages quarters. while have are each been labor been inflationary by from shortages on see pretty Again, to much and to the there story costs you everything same there hit of last two categories. the by read chemical delays higher facilities Much demand a very from chips back, Gulf to to product certain are oils and commodity prices. store inflation.

year-over-year read of higher I quarter our I do keep our all our what with that when that merchants talking in to kudos need said, and a to to out and department with estimate been ago. much traffic QX to and be warehouses consistent there. pretty overall inflation think bit and little products you merchants, inflation and able get we the range. our a we the rate All order an have For to 'XX, in and the X.X% discussed the full. X% pivot estimated price job necessary where But operators That's our merchants that that to

including keeping Look and be that gets strong, operating the versus value these members it items continue I the but gift are might And, year increasing on with of was albeit the are up, sales merchandising, of a overall cards depends boxes think when this our best dramatically merchandise enjoyed of getting and many Alcohol over compared more sales items. strong, couple to challenges. reflect low One appliances, again, our ago. together year gift While continuing of past sometimes holiday has weak a stuff ago, various the relatively flat Anecdotally year strength a we in. last ago. seem furniture Apparel -- prices like. apparel much the consumer on benefit to Pet show and growth years. achieve you it products to strong in pet despite actually electronics, been from are continued strong population year,. Baking as has spirits a expect mattresses and to this comment. in people course this [ph] results is competitors. a reflected stronger is for

commitment sustainability refresh Our week. website major a this received

about free commitment. visit then the on under from feel our please homepage site. linked and the column sustainability click It's So to directly us

that after we January Finally, to results to X on sales the of over Thank Sunday will up turn close. releases, market upcoming With and for back announce in X open X, will our weeks it ending it Sadie. terms questions January December Wednesday, I you.

our Michael, For UBS. we Instructions] have open. [Operator Lasser first from question Michael line your is

Good Typically to Thanks for which taking lot a in be inflationary to the the X% question, else are that assortment. than Costco slower in to others seems increase my number that's evening. X% has sector. been point with retail line across everyone prices your a raise about across

is So gaps is to market? Costco passing And the the the with that ever you between -- is the given pricing past, changed respect others along case? pricing price and Why in power today than it in increases? if have more it the the posture has

think we've on, do first on lower a there's recognizing cost what these always to be the a to you passing increases. the to said raise we limit want in Well, as the price I -- relates to it to can the last price, based

us think think mitigate less form any taking little we then our those with to relative and shape work it well combination is a may markup a can, and First price in our our expect. as that overall, I numbers, and as There's no numbers suppliers kind way there. consistent of our increases less of increases you we and there those increases of in done a markup. relatively more purchasing Ultimately include power our that of again, cost as answer job some relationships and, or throughout taking I fluctuate good because our might maybe with vendors, are foremost, a inflation those complete, we've But

something examples unrelated for little For going few going bit of there be an may flatter, down up, something a reasons. of every example

year this saw and different And our so starting way, read think, articles, to announcing inflation out into have continue and fluid. so. fiscal continuing summer, QX this increases fiscal consumer and We bigger do a best as guess, we several manufacturers articles in ago in general again, it's product it's there all a I certain about months major

hopefully, it'll So it's to the getting towards and and start we're But I think flattening subsiding. going we'll top continue, out see.

the core ex this margin less gross the lesser or question and declining is Costco merchandise margins when here with or than a margin bad last. the function on said, had all less core follow-up these that of you. fuel to rate, a a go margin overall than My higher this others. Is gross Thank is the you is And just with the getting it structurally you've think a at go past, quarter stabilizing? exits Costco dynamics often in up, retail sign simply pandemic which margin what do core little than for a

a roughly think share yes, item think because of that $XXX with which often So I be thing benefited some feel that things TV The hopefully is occurred pretty about many do higher model that to the think of I things is think in bit. of I arguably, fighting think of having we'll thousands doing hundreds of only structurally and ways something. biggest particularly do, power many margin. side, some margins in any market terms that have billion I'm impacts that's some with it or buying some or has keep we items, power X,XXX going last of bigger wait on we'll even will keep future. thought comment, use it I But But can't I helps We'll it's end structural help else versus to XX,XXX the I think, And, But there. we like the that is anybody sales to that it see. from in ish said, hopefully, day, sticky. the productivity, last will in of most items. your little foods, more buying build us Look, actress of made. we'll Hopefully the the we be that sales always always at But the fresh we that -- and of famous comment a that But and good you gains. as once that have competitive per some probably levels company battle not and have be there. out items of in

Great. Thank a Thank you good much and holiday. very you. have

For our Stanley. question, open. from your line Simeon next have we Morgan Gutman Simeon, is

Hey, My a Simeon everyone. like first is question you looks actually did The ask I'll for I'll better. this Maybe pretty follow-up And like a and X-year on core call. getting be you good it it on it looks to you job way, said it's Michael's question. you Richard. are. second different a thought yourself, it, actually core

be So feels environment you're may comparisons, worst notwithstanding far. shouldn't this for at easier. that, go the the of the then managing to be get through margin. if start core it they but of And worst too harder, core why be the minute like say the get getting don't the getting we're better And but want kind it. on I to they

-- creativity I market higher storybook world. examples, to hopefully at able to we part of accomplish. out good with -- going that to I of but figure to changing that the take no, the end the the stopped make of about XX of to moat of the we're what look, using we've we to a whether not It's with certain drive structurally how continuing different share that's suppliers be to aside, we've our or how to little think feel the working again but levels. value is can always parts pretty buyer moving value. And Jokes something think drive sales packaging, look, Yes, goes. volume, greater bigger. And it's I'll production of to call in what And lots and day, even ways to continue been

I So hopefully with so play continue and playing that you is to that it'll the far, out. story suggested agree out, you

comps SG&A good more is on cover always single question to the second point. My enough business's chat leverage enough. dollar SG&A and that's to doing digit about, used Fair the growth. mid We Costco, and

going or this have closer to X.X% year. the did to you're not Well, quarter, end some business about wage to the of investments don't that I to the adjusted. maybe And think annualize middle growth of dollar the these

that single-digit trying leverages to rate I normal think does mid And mean expenses, it's is the probably estimate still estimate where do comp SG&A related to Where's range. best that guesstimate sort what of at probably say the start? I you get of I'm So is mid single-digit point rate that that look those SG&A and inflection in on the a leveraging COVID may like. not then, post

think been the Beyond volumes We've continue expenses. leverage help comps that a, good be who we've to some in able to But we sales to the about particularly we've able heck having able knows. notwithstanding pretty I been in increases. I wages, mean, that, feel of these been strong have those helped these numbers.

find juncture. average, but would feeling better to pure they a to we'll things base, But back And as back than to at at So again, even been helps that we're you comps where but as I a have and soon come we pretty hopefully little this good out, pre-COVID, you about point, know. let higher had bit. something some on assume

Okay, great. Thanks. Happy holidays, everyone.

You too.

next Horvers Morgan. from line we Christopher, open. the question, JP have is your For Christopher

everybody. evening, Good Thanks.

end your pull still in share. against trends X-year October, decelerated then acceleration last bit think, of things month obviously, you to So, basis about I and year. an and weaker, what the and But I a on comp forward. was gaining holiday in ask November little amazing sort on trend of it a thoughts saw a Obviously, wanted was

How the in year, that? on think that's what So, to And next driving can going you you out? rest you thoughts bunch the the what your consumer half holiday first about that lap are play season? of do initial is talk a about stimulus about, think like, of you do a think as could of how all

forward. of it we But still percentage Well, the that a been than of had number, as than -- you you pulling last when comps outside little comes even under couple and next good. were that. overall, a reduced expectations, November's what just month's expected. mentioned, it shade bit good, is within couple view it's Probably just we're the when But varied, points very is again, was weeks prior a months the better I little the day, think, enjoying different a

feel So good I the I in-stocks. our is one is, think thing that about

a out the that and indicated better in is senior could that, had stocked in put just a of with from done are that on about we're at had we bit feeling a view how Our something I merchant the business, we a part anybody day doing of there. his little is of is fact his or -- yesterday chuckle mean, are call than I job. cheese. cream a we that limited something. else reporter item think selection, And pretty other an good asking a I But place we've

cheese it extra so out I got there took but said, and we and cream And little cream as shops need. the [indiscernible] a shortage bagel it got being cheese checked We the we've the work, challenged. actually are all buyer

merchandising. a job So good I think in we've done

it. Got

I think that into entertaining and do year, stimulus people actually spring, if last you baking the stimulus consumer, the business are a back you do Christmas stimulus side. you to and your in last And But probably as as said get -- think as January and about mean in you year? lifted you more, and think so, Year's, off the get stimulus think the like I guess mean, closer I you comes New I

may some but that to in couldn't even as people as It happen less stimulus bad pretty one historically lord factors, much -- I reduction impacted other, not they good in have Look, how save our want people years year, we've times, probably next feel been good times bit. and to going that little change they stimulus, where good the know it financially. there times, around more we've bit. when there's in that out want in to the spend -- people is a about the do helped how both a been shown view we same. to impacted market little knows hurt, But feel we more. of there's if directionally and been what's and a over general the with that good stock feel I feel and items tend because we here, well, That things

from think times, tougher to stem and sell additional And time. in and the for might products services so there's a first that I merchandising be willing us

we So future pretty sometimes and looks the from good benefit what bad own right now good like. way, feeling in perverse we're about our and

shape items, way, the like mentioned, things Bob that reduction other elimination thing some to or supply south even get going form head if some lack chain in certain by of Oh, way, that or just point the better. stimulus or certain at is

do But -- I our rains some better it's other to to in do more if be chain of that are non-food on Even not mean improvement of just an supply everybody. we buyers that's thought. XX% in running better I as plus, are, that stuff, had in categories out And good things if we think are will detrimental could still up that any supply some us, or members XX% As of the more. items. those certain offset we view, had that's and we're

Got the and cheese it. at run Take very the cream enjoy care. Thanks clubs on weekend. this much

Historic.

our Chuck next is from Gordon Haskett. your Grom question, open. have Chuck, line For we

doing a on we the fully year-over-year back basis improvement looks investments last XXX wondering up Richard And on guys costs off. basis you have rolled charges are comps Question realizing leverage. you may points and enjoyed like other were it if the and points but Hey, If one-time stock quarter, some over XX or basis of quarter. the better, Hope well, in Bob team.

that on front. thoughts some Just

taking But number at ago. regard, do you it my -- in QX an of of of did stands that think sales I'm that be one it there's charges my leverage nothing it X that the in view. separating small impact growth, that here, had was is that sales related one the in the increase we my would the release specific COVID we a because out frankly. we strong Again, just and hour guess factor. about guys estimate, press didn't March, And more in the about, terms talk in looking out I in and new was weeks -- talked factors strong dollar started

Okay.

then And just enough. on fair opened XX Okay, storefront, the in thus 'XX. far

is just of halfway because higher to more I picture, existing backfill great. more was your any perhaps discussions bigger of the more you're goal, any markets, there to which your the some any -- wondering throughput handle So has more than volumes? been where just productivity more areas some density just stores, can't

yes. that the next when methodical talked over And and -- used that in we that's I'm warehouses had the it answer the years. think be we is thought up. I small those XXX be numbers about making think to increases I mean, that'll several average, I

And the the XXX. years think And hundreds, XXX to at we I have in several XXXs XXs units XXX of. the a high least. average later the an not the number we So of U.S the have was but mean, in I range. average now in

and been we're year, it a so for me. detail X in X if it to be year. of a is of kind be doing a have front day Could to years, in X looking the And I to year, infill. we've X more that going X that That last or don't was X

guess on that November. And Chris's last great. there. wanted moderation just And color maybe then was just is out believe inflation, basis came a just that happened? in one in. Okay, wondering did self provide or follow-up I that could inflicted, guys color I if Was where any get XXX to it there you retail so. I’m on my inflation points retail on you some some call why

and still was but a anything had food specific lower that. in little, in from we it's where more, it little from little and beyond a And year-over-year, down been. a the even spiked That food it up sundries was fresh. sundries that bit quantified then haven't some came thing spiked increases One had items it

right. All Okay.

saying with consistent And you general suppliers again, -- what you their business hey, February, some not there. might And, this in periodicals. more January, expect, the is various in increases. out They're come see as you'll they're read articles what I've

Okay.

just So of differences. timing a lot

Okay.

Yes.

a Thanks Great. Thanks. lot.

question, the John, have from open. Guggenheim. your is John For Heinbockel next we line

brand what better in terms of items you inflationary do So, Richard, versus in side. do happens an you environment, on environment? the or in and how KS think [ph] And inflationary about like an this national how KS performing take how is it price

our of large Look, comparable items the KS unlike many do dealing item. a such are in with we volumes CPG of branded large volumes. It's not

And cost a than at there, those of rate discernible. still grows them so faster but both to others, try mitigate little nothing increases. we're to fighting out KS with

I to with keep new think of and different finding items we variety a do KS for reasons.

don't -- it continues to drive so But difference changing. that's a brand. no, big there's we And think how that I see don't of a

Okay.

Secondly, is you're XX% needs. Logistics on XX% talking Costco the your of

capacity still that? is Is logistics? it what it at crept You're Or in above XX%?

at we time. of it XX% our Logistics, capacity in the half California. it. on mentioned it's I when for needs. based the and within a higher or variety a multi we've Maybe years. we million, over Mind that, foot had slightly grown so I money have above of we're few Costco we call, the spending on I Part square think need. million our quarterly X.X It's last moved the now volume, logistics distribution range. slightly And grown facility felt originally bought for $XXX We total than fulfillment and bunch the XX% as certainly on of our acre year million well, next a ago. had a we're CapEx we of base And that a you, as That's spended on we in capacity Southern think of plenty what's over

but or its million feet what all of where the acquisition its Much big business billion was in we're stronger we're way, were particularly of by space time. fine, the area Some XXXX, we their -- is square relative they to geographically, bought around of April of an stronger, of that of leased. more of sites than Sears X most Innovel or the the March where much sites, is XX foot at square country, not had much the

big still and business we're in a way. merchandising given money particularly -- it. potential And it. it excited very So a growth share items, lot us. side, we're a plant of for upgrading those standpoint, that on of helped feel small But on our from many again, the spending of it's And there's market we grow we’re us about

Okay, thank you.

Barclays. Karen next we the line your For Short Karen, is have from question, open.

talk just wanted Hey, I little a to thanks very ticket about much. bit.

transaction on called you inflation? your for that out numbers on you that but inflation ticket the AUP, expectations at and/or kind per also U.S So versus X.X%? Can parse of that quarter tie the into out

because me. examples Honestly, are have in little key Generally the I that detail manufacturing meeting a I the of front by by price in packaging speaking, have part presented every volume budget to mean, the moving don't shortages. taking and maybe like there's another promotions because electronics this what got year, price, that down items that of I you world. can't. less X every less we're you've in changing down weeks aspect TVs some of where were of high of of going items

have in for me that. front don't here the I so detail And of

Sorry.

executive obviously, -- for but I years asked is think I been what you almost update then gave, while. maybe I this X the you've a the average can executive gold, for to the of maybe on changed sales, versus you wanted members frequency don't percent And gold? how know last, Okay. ticket But has an over that's And then, of of versus pandemic? given the give

back. But is [indiscernible] somebody back or see to question the want another ask -- can will if I sheet. gets to I'll you grab they of out next on get it as that if room I'll move running soon as the just answer to one. And they

on your my Well, dividends? thoughts would in balance just on question special terms cash of standard be

Oh, strong. position we know as day well, The soon -- you'll look is our know as cash or the after.

in not out as conscious in a if, we win be that notwithstanding pointed and do I It's a quite things when we've at operations it. done also the is probably the shareholders that flow of made this we but a juncture. increasing cash growing we so One It's years. our CapEx well. way, it, Xx when not like decision it'll rate is I'm something when X stronger to but seem We be our it a that cute, at trying and is -- from do haven't to

can then don't some for spot waiting maybe that you're color versus just you've numbers the us of given maybe contract? you executive, percent on is And I number. know what give while freight actually Okay. ever just that if on

exact contracted. number, the have a wrong, don't I be but could willing but XX% I it's bit, to it bet, little plus. I'm

we X, contracts. might contracts, with X recognizing and Now X do year

any that of on period, if the So it'll take gone still X-year And benefiting but to than stuff, beyond three is, is it's to then our X-year or X-year time two normalize so stuff, less start somewhat. year stuff. over benefit And assumption now little we're the on and

Okay, great.

Is it happen today [indiscernible], yes.

Right.

again, have think I -- of done not it's we freight containers, far. do a that at users good staggering, But and least lot probably to having of probably with we other a job pretty spot so of stuff large

golden ticket and mean, frequency, you I if Yes. great. Great. numbers on that'd those and executive be got

Gold don't a Xx. don't back with quickly executive came compared member they ticket have I total is we almost -- the member Okay. have is per to What star now right spend changes. But average

you. Thank Okay.

it you. Thank X.X. Call

much. so Thanks Bye. Okay.

Greg question, we ISI. have open. is your line from next Evercore Greg, our For Melich

I’ve is Hi, Richard. questions, two little the margins, digging gross a into the One bit thanks. margins.

Can at e-commerce. and Is by you where of was so offset the penny You said travel profit mixer. then -- that was … that up have gas gas helped, but explain sort even

was increase down got XX%. you XX% but Margin in percent gallon. a price per

it. Got

the might itself gallon, per you but still So have was more pennies down. margin

And that e-commerce. it. by then Got was offset

We're on and as any expenditures time just what description. when activity, just what if little read doing and given the it we've gotten fulfillment helps with can to directionally over of and would I that we a [Indiscernible] e-commerce expansion, we hurts a e-commerce. lot pulling Yes, bit. trying again, all a everyone and share not tickets that we're into whatever It's in this week. going and about else it. it? product month from don't And it's I issue mix or view margins big rapid investment -- else more if is expansion a the on and whether with up the about something down -- competition what's little, little a what happened. less

bulky, tie is and quarter And that. of then logistics. the a it. Is about? bulky talking at scale the a on sales, Big we're roughly of and X% we discussion maybe e-commerce big that's back if kind Got of its the look your that

third. It's a over

third, great. So we’re

off And up point. shouldn't but then impressive guess, renewal tick at it rates to some least, last I we have not the come how do -- continuing what --

given you have first more that Just year members?

I XXX? to speaking, auto get I renew. it helping mentioned now I probably think when earlier thing [Indiscernible] in No, is, as kidding. single this Look, and just the that's right biggest

on brainer slightly sign up people number to executive to credit executive as in a likely we are a as to them and get a members, we That's new XXX no a more every member. they bit Canada. two card signing more As people help U.S renew. of both in little up the higher big And we, people convert co-branded as for

new things -- those in to be mentioned around of lower now The they starting and their rates they a tend warehouses year while first the generally markets and were. a or So renewal have two, rate year world about Those as or renewed at to very year. help are much thing are starting prior well. more have the renewal those than as then people grow continue I higher

but value there. the little to certainly a a help we I'd bit. things help those proposition probably wonderful the all So and all renew is things auto good like think do it's and

one. increase, guess, given that? be self then X membership? on about start are might fee thought as when back that the already executive the Just hike has the is seem years it last is to fee? ask selecting the through Does be now. process questions I thoughts just thought the And probably you we What next hike our because members And half only someone change fee to when your since to are that year is, last, the we'll getting

to rates, said, So -- feel it's so away, rates time little see. process that thought when a of I've a the process just and loyalty think that in But it. still while as we [indiscernible] help bit renewal strong and past, renewal good, we'll certainly we about and

great holiday a have season, well everyone. Very

you. Thank

question, Betti Rupesh, Oppenheimer. is next your Rupesh For open. have our from we line

taking question. Good my for evening, thanks

touch I Canada international. wanted So on and to other

a accelerating you color saw X-year any of strong Canada more we So and those terms what Is you're provide for there in maybe both in international. other geographies? and can seeing contract

little remember while ago, it's year It's countries -- I'm a countries a different more the better and ago, and foreign of probably I locked about probably down, some wise. we differently. a later, down. timing roguery, COVID were then most did help they how getting locked it's got half year being what a here. impacted most is

is everybody much one so on reasons that's And But it concept. the stack as reason. the think that's X-year part I I that of as up is think anything the of picked

your at look is you a an can now pre-pandemic? update to versus ancillary you as then And as great. trending businesses, Okay, way find how there they're

delta it not was then almost it I pre up again an auto to don't detail up is is shortage cars picked have speaking, a ancillary then that was have it of the tires me. And Travel example and program with back hit. variant But as was But where pre-COVID. coming generally down was back there. because there's hit. out of then Omicron Costco an business. And where it

retail Pharmacy shots. providing plenty were, slightly there. have don't quite think I So they pharmacies, vaccines. come great, Food and things. by pre-pandemic. they're they're is almost I think of it fluctuates helped, like trying We still, to quickly. think But Omicron pretty back. come below courts back. though, doing doing I'm have the aids other Not Hearing where great. Articles but frankly, the other

you all Thank great. for the Okay, color.

Okay.

we Stephanie, Wissink For have Stephanie from line your Jefferies. our next question, is open.

Hi. Good for is on Blake Steph. This afternoon.

for the higher be been big in-store experience. late shopping guys It strong a store will like of as question fairly of retailers. proponent sales have seems First are level, you

the So e-com discontinue have your can a pilots working but you you your test, versus e-com wondering, might shopping that. if then maybe did works maybe you any can on? versus Anything share. share expectations in-ore know that compared you -- you I been how that how's have your And recently? pickup in mentioned you've you

picked same things is still of that was summer, or company. in from it skyrocketed late during above it's know, is pickup to lock downs sales August. you way where mid for like but as day ended from X% billion The in the online talk and have the year mid X% E-commerce about peaks, in-store Well, Instacart both quarter summer up. fresh our came XXXX to we for because on down this last every There's sales those $XXX pre-COVID.

one part much And we it non-foods fall ago, for things March lot because the were and a food years well of their was. of on and little has them had X business our end place to things and taller believe we of that buying number, [indiscernible] out going think driving than that, if some bulky back to notwithstanding kind helped I bit. certainly put -- X as the the got really I of don't were other categories, with to XXX% stuff. think go to weren't in-store weren't travelling, to people and home. surprised aisles people anyway. big when fact the first but now. of a in the the things, and And I quarters, got surprised now people out plus. bigger less wider XXXX, requirements that's last ceilings It The home. that's by heard buy could I'm games we we've strength May that those So by that At that like I've that I the X which occasionally same that the was of or concerts, mask helped they think day, all go But much going that felt in in their notwithstanding [indiscernible] weren't all the XXXX, they they we year and XXXX, that psychologically and of is top in taxes we're X summer and for items, all all overall

a us that's pleasant surprise and to continued. that was So

that lot. a in I buy [Indiscernible] did we and warehouses have over year with Mexico in up over whole not mentioned online I U.S as on our small the In have New pick test lockers. -- have call, from terms tests, of mean, we XXX of other with now a store.

we're pick about online, up buying of sure in quite terms In that. store, not

that doesn't do seem things buy lot half And shop not a We [indiscernible] it. come have come people few or in the lockers, in and and of very lot busy of there's that and a they a while it locations, we on be the to room there. they're for people clamoring online that

And that's we want. so what

doing I that, the -- -- beyond everybody game But we some to of don't briefly I and these digital, to should of we're that some else think mentioned mobile So those are these sometimes additive of think late things what I about some on be are that the have, do. on things. things we

QX positioning. much of, I QX the wondering challenges are seasonal helpful. and any on may you How also ahead super items, summer? your foresee spring was That's or getting inventory for for any you and

double things somewhat we early. square bringing we U.S view our you our they early I the issues, system XX a budget we the know needed what are brought consciously of they in things talking with slightly or bringing about things it, volleys that but little We have things -- in that meetings distribution exactly. -- we feet. other And million about more us think in Recognizing certainly helps with when that depot, than I storage seasonal, start if don't those in something aside like anyway. know from presented the buyers we are we the call early. Innovel was essentially acquisition, or historically with

a earlier, think we we somebody if are better we've in still cash, a doing around invested they if would even as think are would buying. overall, as whatever may the than be, items a later forward extra But inventory, good our were So little billion on be pre-COVID. -- But little not than for as dollars have I job of hangs some doing I they be certainly some mentioned bit. it to have we it

openings one thought sneak quarter I you XX. said anything in. think the said If but Perfect. could more XX. I new one it, I were the aiming missed towards call out? you last to Is this year, I last there for you might have net

three said quarters of the When was in last fiscal plus year, year, it the [indiscernible]. I XX the more

Thank very Perfect. you much.

Paul, open. question, For from our Citi. Lejuez we your is Paul next have line

Cheatham is this Brandon the Paul. wondering CapEx. was everyone, for we Hey, talk I in if increase about could

it. have front we we CapEx thought I spoke think of a [indiscernible] last would

I'm a playing with And there the change has front specifically catch is can feel in wondering, you're -- that? groundwork sounds it's e-com like or strategy just you anything it like it four just in there that on do laying some of up growth, a Now for the you it. share the there? investments,

Sure.

the to relates quote about X.X this unquote, I years. we're mid threes mid These as low year, think previous up year, now last threes of had X.X four. last I over numbers couple the saying about, talked to we couple of from to think are over the

in X.X is million that facility included Southwest, asset as earlier fulfillment mentioned with our square last fact, In in import $XXX million which as of stuff. to I our Southern million a year's well with California, $XXX basically or foot purchase help the X.X a acreage lots plus

And 'XX, from you COVID. to take we in XX it's think if expensive fiscal there's, delays little down which new more units some a fours for tends a said big the international I low what -- with to to you be the because expansion, expansions, the years we are threes so period, things low over net a were location, few more more

ago units to at fiscal and But these are relos, I'm Hawaii, And gotten whole billion depots, better new volume these there's so way. we on the in well as I with in spending six what's additional some stock Actually And cross We miss little which money now of day, were year concept, what XX a we're the the of or $X we that of Clearly starting that, warehouses. XX end the countries in net things. a Seven, with might our do international -- relos and Costco think acquisition this is Logistics, more five be starting bit. more XX that adding some footage call a even now planned. year. -- square locations? as of but fulfillment plus have we the going we’ve investments. locations. a efficiency side, in building there with overseas good distribution the sorry. depot five mini volume Seven where the so and that locations, huge a to to to

billion here of things. So a in IT. we still to year spend it's a close Mind all those a $X lot you, in

kind forward it. Got it's should And going of think we about long-term? it how

all -- expenses, CapEx, sorry. I'm That's way, by not the that's go that's ahead

long-term. the And the think should X about for we billion CapEx what is range

long-term, looking maybe to we and for have sounds expenditures, cash there regular for know I capital continue plus not on we're has the income the or -- been four to it our think right if think little dividend two. been net exceeding up grow it the goes our spend if like. things flow exceeding -- well And well don't a spend about well, just don't and has we from plus good grow But because go bit. year things cash to I next flow

with also could you quantify the switching as if side Got well? shortages. impact if you're anything there, than usual, quarter. you're versus it. on kind normal was that products, have to on And And are logistic consumer faced what of that that does a able you when you wondering change behavior I out mentioned our more

means the new spring suppliers of recognizing have I honor. all see to don't were back we my XXXX small which from think number, and to a to going percentage. goods. it's way exact but -- -- the is what back will perspective, there were a single-digit were it We creates get What it is can guess it's back though low out hoarding relationships, people going I when to their additional -- mid

not months forward only You we just for three that [indiscernible]. the

and for things that kitchen, that and to into advantage took in some things, going both gadgets and electronics brands advent summer barbecue the with indoor And just think furniture think and opportunities last into grills additional we and furniture and of brought home, for product [indiscernible] so -- the there items. I the fall were and with expand I the patio of and all by necessity

more And treasure hunt, that of And so yes. it's than anything. the

retailers, So or see shelf small half when sometimes not I but go when it's any some I I'm a you'll think but into spaces. into empty it's going -- to some names, still -- piece, go I a

you the very of First good day, once of something the think and of a I keeping all, but have our at in full. there done end the put buyers job warehouses

Okay. for holiday. Thanks, good and luck

Edward, question, have next our line is For from Wells we your Fargo. Kelly open. Edward

difficulty] can to Any [technical thoughts [technical somewhat that expect guys. margin you ask similar. afternoon, difficulty] quarter incremental Richard, Happy you difficulty] Good holidays. reason wanted I Hi. share considered. should some [technical we current additional gross

You're breaking up during that call. entirely

So I every want about you yourself. if heard repeat to other word,

Yes, sorry.

about ask So to the I gross wanted margin. you

As you you things on share can any quarter? similar said, the thoughts think. pretty good the additional all considered, Comparisons in I core looks current

any Just pressure. wondering incremental reason if any there's expect should we

[indiscernible] think gallon lots I that. structurally us is standpoint, of We per some mean, -- From about competitive Again, profit I of everybody other a allows to things. talked more our that pennies there's competitive. to model do allows us

really -- pretty have I we pull prices key lot the here. able good think hold to don't margin. out pretty And being that And of items. to challenge feel We're a we that consider terms think I of get on at there, achieving to think we we've are still levers to we a how are the in a got -- figuring while of good we I the company competitiveness.

of we see out there. what no So big changes

Okay.

lot changes things about But month, good a down. every things there's some of and overall, some go it. we up Just feel pretty go and

as well. picture like a on for hoping update maybe something talk thoughts you're data. about, could little doing things then people customer just of maybe a hear on big that And what an that just provide with we just any right. media was you I just bit opportunity then lot more And [indiscernible] All around is personalization.

they're is tree very terms a more and low level think little so ago, it I But pretty that at That's I put of talked hired they're ever those working targeting a senior the half data that. will bit next was thing we It someone relatively much to still there's on are here. about done not about years. hanging in that he's bit, the there you We've on. we a but can a only the little, come more little come. And analytics. year just what together. few But time tell have group than over we've a that that's fruit think that -- done, in I things

Okay, thank you.

take to [indiscernible]. two going more I'm Okay. questions,

next from the Loop we Capital. open. for And question, Champine have line Laura, your Laura is

rates renewal percentage still renew. auto because on What of auto higher point? Richard. it's part headed the of mentioned you'd mean, in a this because renew follow-on. is Thanks, I likely at are that [Indiscernible], your membership of

XX% It's and imply co-brand Canada, about XX U.S cards. of that's U.S our the about company. we in is would the have Canada which And and where and

you, So the XX XX a rough numbers. be-comes if

Got it.

it about not XX. I’m Oh, in do and any it's co-brand. sorry, U.S the just you card, Canada can But on

so Thank Understood. much. you

Kelly we question, our have last your Capital, BMO is Bania And line open. for from Kelly,

Oh, here. in thanks for me squeezing

wanted just Just to a gaps I have just could seen you is past volume widened. the inflation And just past your into good little the about in have Costco's this drive you've like bit of environment. about for price anything magnitude you business? the think quarters where of how this talk couple Richard doors? in Do -- inflationary the possibly it your kind mean, even more talked

an from things argument mean, that I more costly. are

sense reduces the us. value hand, that that overall, one on it the demand proposition extreme we're On the helps maybe

heck who the So knows.

long XX little morning is a end that little, going it's ago, years because course, the X% I of was think this we it years. a that I And many have. though, day, us think of helps that the the year. inflation the But value for and regular a the so be was I highest more right proposition X% was reading paper inflation year. plus Wasn't -- at ago this or to a of in

color, but there's impact put that forward. where any wanted help And going checkout and on the initiative has for some you asked you in a check or the on self checkout self are that. with been lot you structure That the understand here, makes And on us if just cost can and when sense. also savings potential just to the

the much to lanes originally, three in it I the U.S. speaking pretty know locations. now or of I'm three. two of four street and locations, three it have We Canada. of many even we've most in lanes And from lanes across expanded And six three of or even

you have four people a area, lane in XX So could checking out.

grow And expand little going so a is positive. of more been to as units my offer it. we little to still a a guess existing it's And bit

Okay, thank you.

answer Well, thank day. additional good we're you holiday to a have and Have around everyone season and good questions. a

call. today's And Thank ladies conference participating. for concludes all and you this gentlemen,

may now disconnect. You