Costco Wholesale (COST) 23 Sep 222022 Q4 Earnings call transcript

Thank you for standing by, and welcome to Costco’s Fourth Quarter Fiscal 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the call over to CFO, Richard Galanti. Please go ahead.

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

X.X% share speak to or date August year’s the required you gas share gas sales income results and XXth. a or be XX.X% gas XX.X% an FX. on diluted $X.XX Canada, for XXXX, $XX.XX fourth quarter a inflation, of the year prior the to per $X.XX impacted update fourth pretax and as negatively XX.X% gas Other past of quarter. year. release, inflation XX.X% $X.XX law. statements XX-week Net the the share $XX.XX basis the or ex and the asset diluted income comparable Net share. reported Forward-looking undertake statements as fourth compared XX.X%. the quarter, diluted per for quarter the for XX last year a the these only sales -- fiscal from diluted press of operating or $XX.XX International, by quarter billion billion write-off by $X.XXX they are to reported increased fiscal reported FX; $XX basis and billion U.S. had share ex fiscal in reported; $X.XX not this or quarter reported; X.X%; and billion $XX.XX does the it’d sales totaled Net of In to compared made, On ended FX was comp a as $X.XX million per ago. $X.XX year weeks except billion fourth exclude to When compared period for today’s Company billion was per for fourth Last we

total plus excluding Separately, reported XX.X%, e-commerce, and all X.X% XX.X%. as told, again, FX, X.X%. excluding and reported gas was company and So FX,

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

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

approximately inflation to bakery dollar a toys, sales sales impacted currencies by were the best-performing and lawn core candy, over categories the in positively U.S. impacted negatively X.X%. by gasoline and jewelry, little kiosks, Foreign garden, The price relative X%, deli. tire, frozen, and quarter

relative and In results. centers ancillary gas quarter the best terms businesses, And and courts. the to were food best performed fourth travel business businesses, other of fiscal prior in performers

million down higher, relative income fee statement of income to That Going reported a $XX.X at XX% reported fee million basis, been a Membership on the would the up on the and excluding in number, currencies dollar. or foreign the weaker or income billion have have membership impact with again, X.X% came FX, would to increase X.XX%. been U.S. X.X% $XX increase. basis. a was That reported $X.XXX

four-tenths And from we percentage at of rate XX.X%, at XX.X%. our percentage QX when end XX.X%, earlier when which In hit up at fiscal end, we weeks three-tenths XX at higher point of were came end at highs. Canada end in is came again all-time point renewal terms rates, At QX it in the a of a U.S. renewal the rate renewal from QX our was year and of worldwide XX.X%.

from a XXX.X cardholders, about just cardholders increase member the million fourth a up under household ended quarter And with members year on of number at and X.X% earlier. the X.X% and of -- paid members increase QX in of X% XX.X number cardholders, locations. we the terms households is of in In and end, that both million number

During began of of year executive At members of over our an members warehouses. memberships XXX opened per under XX, that XX% third just a XX.X XXX weeks during sales. increase totaled the the now year, our end. locations week million end, QX base on with and we the our million, since paid XX or XX Executive worldwide represent X.X quarter XX%

specific possible a increase, regarding this terms membership increase of In no fee a plans there fees time. and are at

member member last growth with when the is to top rates. our pleased is increasing quarters, something reflected let membership and loyalty in over know about We’ll households happen. several renewal We’re in both, and line sales you

Moving margins. gross on quarter to fourth

reported the quarter, down year’s gross compared in basis last points came margin on of basis gross XX a -- XX.XX%. reported XX.XX% margin at For from

XX% the on reduction XX Now reported basis. -- basis-point year-over-year the is a

was and then inflation, minus down on we bit more a it basis we few XX a numbers, gas margin. elaborate we’ll Excluding as actually jot normally points. little And do,

So, year-over-year the change. reported change second would the net ex would one be columns year-over-year inflation, and two be gas

reported total by excluding penetration increasing basis contribution gas XX points as and minus and year-over-year XX merchandise’s margin minus relative -- Ancillary reported, and by gross XX; XX So, impacted gasoline our gas inflation points mix ex The other core X% lower inflation. reward, was XX minus and minus to told, the basis. outsized businesses, and plus and negatively from sales Starting lower primarily mentioned, with the the XX Core ex and XX XX sales. all gas the XX points. core a basis minus basis, core, X; basis sales line to sales margin on second and total on our X minus of core. XX; minus year-over-year; I plus LIFO, merchandise item, inflation, the

core of QX it line minus minus QX, XX ranged and basis. points. and our pretty in the That’s by terms lower XX XX of on core last basis three when in in in quarters year-over-year were a XX year-over-year with minus In margins QX the much from QX, sales, on core own their margin basis in each points

margin businesses by gas gross of higher Gas, Ancillary quarter. but in So was again, change. XX were as better by year-over-year somewhat overall, basis and it court inflation offset XX the ex year-over-year, higher XX other was for well pharmacy, quarter, points minus basis optical, course, as and centers travel and the by and points business core-on-core. positive a e-com, food

higher basis down penetration Our executive gas on basis or coming X% reward, was ex lower sales I our down -- an X as implying mentioned, points, higher X from inflation members. or

higher relatively this ex year year-over-year has know, higher, In that and basis, million; gas charges terms XX as LIFO, LIFO on the LIFO inflation with been mentioned $XXX basis the quarter. basis represented here, -- million quarter, and was It year-over-year. part the inflation year charge of charge I an or LIFO you $XXX XX million; last $XX third as quarter. increasing. of points, small that first the Recall million then the in -- for points a down in $XXX quarter, at our were in

basis, charting of XX gas points. basis to X improvement here, compensation, We central, reduction improvement; core points that X plus plus X; basis plus minus plus basis, improved points. SG&A down preopening basis XX a few X; Again, to XX X plus on last you operations XX was was results. good basis year-over-year points; and other, ex reported charting and SG&A came X; at XX ex the a basis, basis numbers lower and at the by down on still numbers inflation, good points; improvement on reported year-over-year. positive points a down XX plus again plus a Moving or again, XX. by gas and But or showed Reported year’s gas plus plus an in to That stock SG&A. ex [ph] basis gets XX X.XX% XX inflation, of expense, was X.XX% inflation and compared

third better quarter inflation. XXXX, of operations In in the year-over-year, in increase increases this top-of-scale that Keep new of in well the July quarter implemented fiscal these during X we and core the starting of went first this we as in terms year, this October increases again, fiscal as of the XX, Xth. year instituted as the as the past increase by quarter of -- the impact in impact March include so effect the of gas well into results excluding weeks benefits as year quarter wage mind, wage this was,

income done by Again, to -- talk noted And we year. increases Preopening, last good this given that feel our the Below at still, at gas All again, a other $X.XXX I million $X.XXX fourth line, since Nothing roughly mentioned. year write-off interest lower that points $XX include stock lower $XX we’ve was that asset operating So, much improvement just year. XX%, income line up year, for versus that SG&A and million that of inflation. was $X operating offset year-over-year, up from Central strength. reported statement by X basis flat quarter $X.XXX there. item. year Overall, we’ve Interest income $XX was big points, benefit was billion X ex earlier. about that included last coming recall SG&A be year million. at I’ve year. this pretty income now by A few the XX%, million pretty preopening year, part sales compensation in billion. basis Interest totaling higher, reported was was on instead the separate last in a by of the relatively other, which that coming unfavorable the a as in XX in the year-over-year. was little And we write-off income quarter, actually increased told, quarter other that but billion expense year’s higher pretax versus of income and impact, million $XX coming this million last each FX in offset to similar. $XX this

income tax XX.X% be we the I’ll of our fiscal the the mention, we The item last our in income XX.X% compared thing attributable terms past mentioned year. minority for rate up is quarter currently Net Costco, JV Taiwan. ‘XX approximately interest partner in to line XX% XX%. one to XX%. from June projected in was acquired to Recall XXth effective on was In taxes, this estimate, that rate, haven’t fourth we -- QX Net year, past. tax that

of own all Taiwan. now Costco we So,

line million will in pretty much the The As note expansion. fourth zero. interest income non-controlling of net few new become forward, zero the warehouses. quarter, small X a essentially, items warehouse better opened in $XX quarter. to but non-controlling other terms amount, result, we going A by a of net interest In attributable was

Korea XX a we in new and X opened, Japan. in So in up XX we were open the net U.S. that in relos, of but locations increase the including expect for XX China. X fourth fourth were to X X locations. year, ‘XX, the net the so the XX opened of fiscal in planned net year a during included new Other third X the and are each locations warehouses, we and XX In In full and of XX relocations, of for so X quarter Canada each and XX warehouses, our of These warehouses. new and including in International, Zealand Sweden, our first New in made openings U.S.,

quarter spending our the $X.XX Regarding year, billion. billion. was fourth QX full capital $X.X And was for CapEx approximately CapEx expenditures expenditures,

year same range. Our $X.X approximately be billion billion $X estimate the fiscal the upcoming ‘XX in to for CapEx to the

X X.X lawn, pharmacy e-commerce what to under from big the a majors, and deliveries disruptions. the X X of two-day of fiscal just We’ve including partners. delivery aids. and some vendor days, bulky estimated tires, items. the by prescription in a cetera, little departments over deliveries XX patio quarter. in in And done update members, this of year-over-year on pressures levels and X of by you quarter, delivery a in XX%. and over wages if days, ‘XX, largest Grocery, bulky we bulky merchandise They in chain X.X present, about from average up our work delivery to Overall, supply we’re XXX primary seen But A single to An in were quarter and ex of those statistics improves business, made parties. little -- terms In inflation and to of computers minor installations in, year. that. recall et continue X.X%. digits. million higher the U.S., In that or to high we were In were in comments fiscal of Costco from improvement Stronger overall XX% XX% all increases I’ll deliver few completed percentage seeing delivery, us And in particularly prices, FX that up in partners. us. to on commodity transition and in million to dry, big the million Costco days ship and the beauty continue to The audio, tunnel. e-com quarter, in and big In They’re X acquisition regarding TVs garden, which drop everything ‘XX, dollars, by fresh you few the and continuing and Prior time improve fourth performed department cost we health to own installations we was indicated price at were Logistics. Logistics, about our Previously, all to and percentage a for includes the is about we installation. higher -- frozen, increased and still merchandise per down we we higher third and were this terms average to and lowers we delivery to was was a Costco deliveries by done costs call fourth third-party deliveries million Pre-acquisition, fact, inflation. with the big our times to inventory, Today, installations our With with X% completing service are the for us. sales appliances working plus above few and were was ship And end third that e-com just light bulky ago but delivery the areas. share and the million minute. years from direct transportation were grow. and

quarter and a lower overall X%, with fourth was side, merchants, little on the foods, the our the and about side. nonfood lower on food estimated sundries talking price little the higher higher on For and and a inflation fresh both

cost prices We’re gas, beef, seeing ago, commodities small a some to in as plastics. changes commodities year steel, down, such coming -- some relative even

despite believe the seeing We’re all to inflationary Wages beginnings some tunnel. versus end others of about competitive whom inflation higher current could overall, In we and a container still And happening, wages able our our some first raise to seem And talk our of They’re trading remain trading the continue light levels, down. cost some to that But have at higher. with you are relatively of prices be relief change people that private of of of one as And still course, recent we are others the course, know, the as trading thing compete. the with increases, course, hopefully, little not to than environment certainly course, is label same. or trading asked Many down? less thing suppliers. and what’s they’re of response, still we each week. all, on pricing. we up we when that’s

that is of Kirkland the Kirkland of a to ago. Signature X% Signature excluding under up penetration name. merchandise penetration, businesses Kirkland gas and other in and merchandise compared carry terms terms just In year

Our for is KS year. is where slowly steadily the penetration over historical XX% time. This increasing similar merchandise trends to and it’s about

So the no past from big dramatic there. change

on-time terms container Generally, seeing chain. has of prices coming deliveries. down. improved supply supply a including little, We started In chain

course, was it the improved. then of strike, delays buyers big market continue. delays contracts the strike hopefully restarting averted. over is port it, in issues rail in and First they any the see our start other No the Domestically, towards place this But or rail some as from thankfully be of to weeks in And that you’ll shortages. should ramp few a view longer see of you and most In Switching that while container levels. spot ago have end there capacity some this the for in that. closures were eliminated inventory to news is anticipation was the week. part

XX Our last that’s terms an XX% new of XX% is number estimated just of to up number. that X% up Of the was just of that growth under XX%. points over XX but it QX up still year, total year-over-year. end increase, end At in inflation. X% And the inventory growth, quarter, the over year-over-year. the up warehouse That’s percentage just was unit it third year-over-year, -- at was

some of inventory levels. we’re our Additionally, a fresh sundries high certain about feel. and were lapping low stocks XX% departments in and as Food demand, last nonfood result last specifically we shape, year’s in of we where are year, in good targeted areas

year-over-year. Our weak is comparable supply

up year, our would certain result increase it The In XX% to in in weeks just a last year-over-year evidenced news terms reports. seasonal certain well, initial of head it’s as is light of going expect good all mentioned part a down categories. we being told, be few in monthly sales Again, bit. earlier. far, in this as start in so nonfood inventories, to to as seem the sales past And has little the departments

reminder, with sales a October announce weeks terms next releases, September Sunday, on for on we this Gutman, to the With market ending upcoming of line comes Xnd, it October of and in the in Thanks. first Lateef. Xth, week Wednesday answers will I -- Morgan X Instructions] as our Lastly, two will Wednesday, weeks, after Simeon [Operator up Stanley. the from closes. that, Our results question open questions

couple I everyone. Richard, ask fees. of to about questions Good a membership want afternoon,

were So if comfortable all, first said sales. of with -- you you

you’re the know to worried fair for get answer And tool rate but if comfortable then, of I’m you over to that’s I raise EBIT business the you don’t the don’t guide, because the It you’re trying that. you business So, growth been obviously a about in time? means rate sales it if I’m you it? with also questioning tentative And your is if -- it. raise

nice end Well, look, and try. the No, day, that always top we’ve company. line at you told told we’re been guys Sure. of we’ve the a

drive do to whenever sales. And drive about years, value. we’ve that. increased We’re as historically member more we’ve fees turned we it Certainly, looking X, to X.X do always we’ll around and it, every used

on end apart. the X of of you the the were out, -- X at X think I to look it’s and they I point months and course, increases, if last at day, want years also average,

If you X years and ‘XX. look you’re June plus ‘XX, talking roughly X at January of months,

just in saying January we not so when, is anyway. inflation are and I’m earnings headline some question we But I’m quiver as do view ability forward. right to our in recession, have not ‘XX. confident of and the now. if. yet arrow given there at Now, about And suggesting it’s go not And and we is, a it’s it’s will. the are our quite point, way concerns comfortable we still driving we And we feel our that sales of

year, And it? still. P&L spending it planning are curtail you -- Do a or The then, you’re obviously to you’ve back maybe any if follow-up, fiscal investments planning or your not the or you planned to topic, if same new do way year. do you through the runs that way cut in

only And only of COVID. do Not and and I do mean, what about at of several quarters, pricing. during upsized line, to what goes do, we part do as have pricing in the gross to we’re improvement declines continue quarter, but margin want all. and CapEx the But you the that. top it’s year and steady not there, know, competitive want just this out that terms -- drive to shy slight of we we’re we’ve are to as not not we’ll the to first last she doing with in was but reported some not margin seen the in company we in what we as

the next Oppenheimer. Rupesh comes Our of from Parikh question line of

that guess There to I there else expense versus back unique So, your sequential QX. out? commentary. the was going to Richard, was your just you’d that in call a expense the was Besides pickup increases, wage quarter growth anything

you -- but than was are was on XX about it talking versus basis? it year-over-year XX other Well, weeks a weeks,

Yes. Yes. Year-over-year.

it’s… think I

up? costs IT wage is I thing more increases. just as mean, think But But is are utilities sure doing little a be the more always I IT the the technology-wise. outsized I’m up thing Sure. outsized everybody that. up is would is --

are just maybe just guys there? even change then concerns of your in the Okay. anything given health there, any Great. consumer, in know, versus out you expectations the And changes any or consumer majors to seeing on your like behavior many category,

there up they’re change. or changes I of now a we’ve from Irrespective prices the see think when some down you -- of beef you to the they beef Well, examples. was mentioned versus -- state we to of mentioned I and poultry a skyrocket, over the those but talked various when see ago, year some coming you when months economy, skyrocketed,

in than Somebody has big It day, of year? positive and we’re -- a and changes ago lot we any hard is the was slower a of enjoyed they we plus years front that terms are if in still of it’s of the made better And comparisons made -- But incrementally, it these that little up industry relative know two electronics, sales buyers beating seen haven’t for sales end of consumer as increased versus because some -- of to that. during months strength still years, the two saw a it growth. Part we growth of a to chicken in up the Yes. our reason. of rest items. industry last is big-ticket canned of in still the whole. the it’s Is it, cases, those each a in penetration last than still industries one the if tuna such numbers a had comment the like at COVID, -- see few we

Chuck of Haskett. Gordon next from comes question Our Grom

the the unpack three-year quarter. little core-on-core like basis, you improvement across that you it last guys us Can a from a for nice looks -- on three-year bit on major Richard, four showed a categories?

in was biggest in or of was way so detail But outsized first COVID front speaking, the in of I all fresh. the thing don’t have that that me. year Well, the generally

higher with productivity. fresh, much you virtually recall, labor and had you you’ll no had spoilage, As

So, you in -- X-digit had you huge there. improvements margins had

have the comparison. departments. the a pre-COVID. was about impact other that year-over-year than compared it’s up Other as we’ve So, from those kinds all years, percent, basis At quarters it that there’s two to in a talked of that’s that, come still on down extreme, where all and And things last in several but where small statement, improving our brokerage that gone margin. lot from business, it almost business down. it’s way down, is a a Travel terms of you the is income went margin -- it’s way now travel. of a And where -- it’s

moving helps bit. a little that of So to But there’s you lot a parts that.

fresh think electronics There else, were here. in the chips supply because of impacts outlier. was less activity things less or from biggest of consumer that. allocations, like There certain was hip things shooting -- just during I’m I departments the promotional everything Then, was chain electronics. shortages and in there or

that that say And was meaningful the puts one overall, was takes. so, would in there’s a most But I and lot fresh regard. of

how think on for you up the last then year? I given charges X to it basis And the LIFO it maybe prices higher was give refresh X I in just that big was the you have quarters to the And this quarter, I surprised wasn’t charge, coming from the said; moved start as guess, over XX much that? past on points, lap Can happens months. a us just what accounting we XX.

was be what then believe something. that account saw you million as is adjusted pro million million of look it $XXX year, of -- that year-to-date increase, you is, $XX million; XX sub-$XX in continues quarter you it if or for the that the we QX, of And to what Part it to then the a something, it sequentially [Technical trend was, -- two going a weeks QX, something, rate we to was on at when that QX, things. basis. you Difficulty] and the estimate then Well, sub-$XX it’s end is, quarter. of that for the way Again, $XXX in million Sure.

a we’ve little times. skews historically that way the bit. in that it prior So, That’s done inflationary

even cases, weeks, like X higher The and is the is higher level LIFO be other of about the through last little some to, halfway comment you our is, was flatten would than out bifurcated quarter, the which the weeks the expectation Part that it that into we, The several the larger would QX. this. was. increase seemed weeks fact asked X second quarter, thought be first X if bit QX It have a showed too, weeks during charge. I a first it’d it of that it from down a seemed in meant of what required in came

And consistent suppliers. partners and little think about I’m a assured I buyers the tunnel. with So about at calling price. you the that again, that couple mentioned is our of items rest the some I [Technical the not we’re are -- in seeing of can end light little a just Difficulty] there’s of going down

we we’ll slow the second As where are prices. at the in goes of steel here. And prices bit to the least of steel you quarter. a we’ll continue do a that. down. fourth because went it’s see seeing road. little so But but improvement of again, are, And up What said, Well, from And half price gives? it --

Our question comes Lejuez next Paul of from Citi.

merch, much for [Indiscernible] some You general little big clear Paul. bit, that that had I’m piece have Thanks of their . Cheatham competitors on How trying taking dig categorize everyone to of you sure for to XX%. about the is been inventory merch? general pretty our as up I knows. on as some in question want a

kind try leaner? to So, and Any to inventory? for give there general of you reach as are get plans kind merch you can of us you holiday, further a sense where of discount

see specific, you to a go Sure. interest, to they’re in $XXX change Christmas than that the a we of from is, cost Christmas. $XXX. And Well, for this really people the don’t the I when ones of if there And on think if came good going year. a in deep example And -- you is year. first inventory last there’s And that to them trees cost added in still and you’re talking that they’re or it now retail of used the the would in they to all, after decent little after -- news without is cheaper holding to and My being little they call add too I’ve style. the Christmas floor. Costco, freeze chunk I essentially the

way, don’t perverse extra that like hurt in inventory. we So a didn’t to us example other that one have than

of late. holiday. stuff. -- particularly up And e-com bulky that is in big big last piece fulfillment not consciously the bulky. with some a it did each We and and I stuff improved on so, knowing delay is supply happening little building are in item a helped little. you. some came early. Probably both inventory, was. mentioned, was as of weeks and a at bring of bigger then there seasonal part bought And The and things delta early how consciously and Part in us what chain That’s fulfillment was many chain We supply has

that it or hurt -- it So again, it things increased it. and there’s reduced have helped

Ron year-over-year it’s X the merchants, what in end and end, just in a the -- and stuff a or we’ve seen delays was there very same net-net, some from thing things in. number and likes and was had fans, But which will direction, other going increased with XX% like while season, small at but talking seasonal things last little that be QX QX nobody going were some conditioning strong Claudine at standpoint seeing right impact year-over-year and relatively even a in think the and in that’s getting a That The that -- again, bit, weeks, again, it. QX X we the forward. I like seasonal air

I have some variety more is the different -- inventory a furniture, that -- one bigger difference it, hold or a of bunch Like other a bunch air think -- it’s we we lot of our to other retailers, get compared of not we things. whole to may but is that on to of specific. have if of conditioners it’s if a

would we huge -- expect. have outsized no nothing markdowns, to some we numbers so, while And what -- we additional relative normally had big

material. bit little a So, nothing but increase,

you. Got

little a otherwise you up holiday than bringing you’re earlier would. so, And

some hold time? you fans that spring that those over seasonal And you more mentioned, might Is conditioners of to air right? and

added easy. lucky, XX the ago million the when That’s we have. square it, is the -- But added or news, X square and we which foot depot Yes. Innovel, call good to call million DCs. the MDOs of acquired space, Logistics, we space XX years million XX space will. Costco big feet again, million XX million of We between And or XX X.X we roughly

that So, in was we regard. -- were fortuitous that .

comes question of Kelly BMO Markets. from Bania next Capital Our

to touch Kelly item Bania to Hi. BMO. Thanks. penetration. executive wanted on continues just Richard, Line impress. from

cohort can’t there anything that Gold I guess executive you the makes in up of today, I quarterly -- biggest think customers question of see. jump can demographics the in model to that or you different otherwise kind as it’s the you those that my over Star about is you that think success same at makes is customer time? profile, can’t have look customers But I converting

talking you I the Also, and to will. several same the of type -- and, Z, arguably, tend millennials at age member be Gen get on of we better think income-dependent. that last Gen we’ve continued up the trends -- signing we then to selling these are we the be years, executive you that -- into and X about value millennials think upfront. used asked mean during see that I what used Well, asked or question to to

too. So, we’ve there, seen penetration increased

past it we when The other the thing, X I to new it country, years, of a added that and course, we is to in Korea. add think Japan helps

have and so, of Canada U.S., And it, the the in we Mexico, course, UK.

we’ve as it over another be too, we the countries, locations. those to countries in terms country, you there’ll number if add so, gotten big of sure already grow. And will, time of I’m And

done no, it, you So you a that’s job think ago, said you asked better we what starting we’ve I if came and what you in Gold got. Star, wanted of doing and you Years with.

Now we’ve we what’s done actually try you to that. job a value share with the with it, of better and

follow on container pricing. up maybe the to And just

think keep to you kind the go your to that and you perspective? might on maybe that of years, the anything guess mentioned do I pre-pandemic imports some business of were charter learned you I is starting question just, kind kind or have about the past you really the of back longer ships strategy, doing few everything relief discretionary expect you from term, over there. focusing

origin is thing that biggest I we’ve the these think really from of learned items. the of source

when back had moved If China, tariffs. and Where have other in ‘XX whenever get in facilities same or or ‘XX moved was we were some there who whatever, China, on countries. manufacturers where tariffs even that from could, those you they may neighboring those to and in, placed items to go around were could of that was were certain manufacturers that

We the not to change learn try extent to out try with some through you so, the But the years more. of And it you can, to certainly couple think it. that little you of to we last say learned can I -- that we through process. spread challenges containers, a

way, port. things. not learned And along continue try mistakes learned to certainly, depend those And we can we too. You we’ve on that to the one all make

Our next question comes from Oliver Chen of Cowen.

of seeing the kind thoughts are how portfolio? That nature very end pricing? inventory thoughts offer And the the And maybe any about industry seeing? prices. And Richard, on on at could on you sounds of What that your second, you’re the elaborate so The and of you’re inflation your inventory. much thinking on... nice. the You is promotions that. such lastly, On tunnel, always sharp wrong

Hold on.

do Other plentiful. -- shortages last saw Let’s do was given back. the I to industry or Yes. the year those than There’s that. we years, less a existing remember on lot of because I the we’re of changed more Supply the afforded other again, one as last manufacturers or like of from that, and becomes in as starting of and that like one you’re And don’t as promotional a well. the those do And of so electronics, There ways shortages a and promotional as allocations in things, those of you’ve online we need be MVMs, no promotions. like see high things being TVs. in goods were along question multi-vendor had lot those as got to shortage like is also, promotional activities paper our some well sales activity things forget. to the volume types some paper both couple of we promotional that There And like mailer, goods A times direct. that. one of things well looking TVs like items high at the huge lot at more way. we items of time, inventory. come saw retailers

ways that’s use And those to figure best we -- the in vendors iterative out monies change them the in as money an how suppliers to the how that maximize can those and figure in -- best way. and with process. learned we we’ve well, to again ways evolving the -- how So, out use work to the

question? Second

Yes. the shoots you’re end seeing? On of the at just light inflation, and there green that tunnel some

they’re Yes. piece up. What not the sure shortages like Well, I buyers seeing down, down. improved, The a tunnel. And calling have were the little light the again, of and When whether our SKUs all that helps we different and in the again, think when U.S. currency little of anecdotally, it. things. huge But and we and gone come of we’re in think, on at is in other same the raw And a I day, we freight because barbecue saying, for have of dollars, at limited think we be the outdoor, that at or and U.S. down I the And port of go we’re Sure. make least are you are in things, and U.S. -- but end generally reduction? using us, -- end a they’re everyone. it costs? going the is And cost steel Craig And that material a meeting these I rates you so -- as when you our something company’s I into right with at better could supplies of But Container a bit. it’s the components to buy -- earnings darn FX just come change But Certainly, since well of for our Hopefully, raw understand a this? these down starting lot -- delays the tomorrow think going dollars to XX% examples, is container report XX%, things phone talked a Ron to things know materials see by when piece buyers, improved. us. that report. you. not it lot bodes token, you in them seeing come happen to we’re the from budget reminded costs? places, Is has go -- prices or earnings selection the down, them of get prices the material direction. less pretty it of have going better up, just it’s limited it’s something why bodes helps that, where raw when things coming the to part a are going volume, well buyers what think furniture reminded at few patio, starting grill again, it number and prices to hurts foreign

data time there digital look you Richard? analysts. team, about the Okay. A, talk know What highlights what as us progress want team. the that kind on science horizon? And Generation for any for well to hired or to lastly, And of now should about your it’s things strategies as I you give we

and visibility. VP You Data things know quarter. of it’s couple on a my a been since lot speaking, a I do have better But we Analytics, sizable working of to has he is get in generally And old that, in what, next I’ll they’re -- that forgot I built years age, on but team. brought any to of a detail on the

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improving We right come. get. our still data activities to we’re drive the in more that’s buyers, but to both this think with the doing business, And the so, operators, And traffic we’re our -- area analytics is that of data first -- doing data people now of like of a effort terms our that. our on lot okay

Greg question ISI. comes next from of Melich Evercore Our

questions. Two

First card. gas on and the then credit

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day is in when our Well, is we about the every and average days. X story prices X that like was -- turn given U.S. the on old average inventory stations the gas every or

-- buying the average, Difficulty] on other days we’re guys four earlier. it So, four days buying [Technical

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it you gas? is still when XX% they And think go the club roughly get that to

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XX a If you’re XX. slightly is as What up. as over under old utilization me, slightly we’re remember you seeing now also little memory But went that the mid-XXs. or

Got it.

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of Benedict Peter from comes question next Baird. Our

with well. you can remarks, Halloween? seasonal about kind talking You your Are that. kind express you trying you Just you’re that? prepared of you were elaborate of to said on ended talking Maybe going what fall seasonally,

inventories mentioned we and it that they’re want the Well, to seasonal also the add dates, once in nature we’re indicated going the is -- did make strength is is good well, the is, part seen in, feel Halloween starting far so in brought were well. that of XX% up early that so or Christmas to the with I by just And the delivery in. put is right call -- express doing seasonal direction we cases, What while efforts that we’ve we what I’m forth. of year-over-year, we doing somebody because -- part is, we in the trying some sure of to

what by few the seen encouraged we’re so in weeks. last And we’ve

And then of maybe maybe bigger question. just kind Okay. picture, Perfect. a historical

your business when it business how of recessions. categories? you see into certain what And back? Is member I don’t you as in from your environment? has think Just indications talk to we’re it traffic? that about kind do slow? to us members past maybe going know. early What are starts it performed the a Is tougher Is the

time Just in curious unique kind the of your in as economy. we’re perspective this

bad -- and extra about talked of as some, which when to of ‘XX, sure and Look, big-ticket Recession. Great I’m was the remember are that get our And and stuff, year, million want people the from Other in entered calendar us saw none about to on than to items in kind We save. People spend. of was I that were, patio course, a to -- for slowdown just it good are remember that, my of done well in like, wish end like ticket generally It things line felt within I X we the at after ever of standpoint, we’ve model didn’t -- in home we seasonal times, years. we first during x in I we’ve year. And Restaurants pre-COVID. while but a speaking, one way, so some barbecue it, positively, while share have of money things, that impacted anybody, dollars did like, to as read happened. go those times the quick they of to we of But a if it X nice still I which from that more share. that. that at is, pretty bad times, had even it’s businesses notes, -- our of lingering perverse the we’ve people things And and ‘XX impacted that. back recession seen grills all that some went businesses or what -- don’t And have slowed. furniture reopening. bottom And an market it some lasted Big eating that, the markdowns, that them, people market it a additional of through keep more built one many and is good COVID times. we negatively, than

assumption to If to as be it as as others I think greater in clear to was the the big bad might year, buyers reminder in conservative down we there. a on reductions price at is, I through good do, ‘XX if the buying back conservative, recession, prior or Craig and find We’ve don’t both, providing do or to go we’re going whether value Jim, furniture, points, it out So a value be barbecue buys patio or regard. to times, or driven going overall, was don’t having to the even that take to don’t not grills the new midway and we bring don’t we -- fine, remember to it’s anything with and did the price continue greater was and was and the that value but in little open Craig -- news be perhaps be. ‘XX it view points. think ourselves think want forward We ‘XX, in best based ‘XX, I

That’s No, helpful. Right. no.

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that. renewal Yes, they auto certainly of certainly -- have piece a is now

Yes. Richard. question on traffic, Exactly. just Last

the I X% so think, on quarter. or

X% below U.S. shade a maybe was maybe in the August think I

there guys But you of guys see kind traffic about I that you mean, think more go a it how than curious Just like you obviously, traffic don’t below, do just better level that. less? about is that? how think to

back drive surge end weak, a out the years figuring surge, how day, of And fan. with something greater the multi-vendor just here change or drive me. goes well. thing usually the I hot -- about And every values, Delta we at some we’re mailers. us is things of it something short hot hits by the you’ll time. to in challenge Yes. And comment earlier shared is see to of sales sales. the into one Part the see good That’s and helped I the of drive possibility how Omicron last it period items. made as the like at, the in dramatically the of couple to door items, the of we figure time happens, any that’s think Look, with David out and that of whenever people was you

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Our John Partners. Guggenheim comes of next Heinbockel from question

thought people it income could take right, And at through think structure have the going you executive any that when an guys right, X% or being, maybe by demographics and the Gold you Star more some sense executive? to executive features, up leave you’re other forward, spectrum? either you has is, Do than Star about so where the of plus, versus catering Gold

Yes.

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it’s than the the other but some issues the non-sales sales say issue states a one currently higher states is sales in increment, level, doing One taxable, a at the but membership executive is the level whole -- of about the certain taxable, that of of membership fee. just taxability not

juncture, simple. take we I still we So also. think went that’s into towards something this At account

it’ll Okay. secondly, what -- about right? we somebody you about then Higher lot forward. right that when is be And think A of for inflation I going longer. sticky, asked hear think

down, As you to going what think not respond? list up. step price it decreases, more going vendors see to -- comes likely trade are to money do We’re how We’re right? probably see

of your how ability do in about think that, about that that? when So, take to think you advantage guys your and you participation

Well, in I think, again, the are still culprit. terms again, of stickiness, wages the

our that I item else think, again, good and high in it. we’re compared is the-charts position, anybody of better as detailed given buyers on per anybody, components not focus a buying our power than if to the off

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as meant lower -- it that by that does price would don’t focused I as of production But have on volumes the now So know right cost. some ESG an or as well if do, well than insight anybody line lower item. we of such now to again, increase And eliminating it part the packaging. out bigger which that’s you been. changing the the given we’re they And know of cost how as was took

Our next Securities. America of comes Ohmes Robby from question of Bank

on Maybe a follow-up question. John’s

of give and the business? inflation seeing, signs sundry inflation you’re can of kind on the and relief relief example some you you seeing of an the of So Are food in kind the as -- side food side?

some I’m is help little down. Certain coming I coming -- bit. here. Yes. getting are down mentioned commodities, like a resin corn,

very I in price gone more give they transparent, even juncture, specific supplier with next three all price to you we months so little feel and suppliers. committed fearful cases, even on we But these that. was higher, when we committed higher them all if impacting some a we which the with -- work they’ve cases, can’t going they I at our were any has In So us, at we this that. because fast, it bit. But anecdotal, higher at examples. it’s, work -- down with a the are -- the priced together again, the And think, on are commodity transparent work they some are things are

And you. just then a follow-up. Got quick

or while, down. think weaker something there? optical what apologize. change I mentioned I did you optical -- or was for been Has a

I in the ago quarter. think we promotion was a year there thing a the did big

Okay.

-- the this lots did we big a did date. a a a -- promotion slightly things promotion big of we year And year do big ago. promotion did on at later this we on So a we time. year, all But

And it. so, seeing we’re now Yes.

more it’s So timing than that on anything example.

Scot Ciccarelli next Our comes of Truist question from Securities.

So, on Obviously, But are put inflationary and today’s well. the line actually pretty Costco soda for items. dog with in sand chicken a pressures. your margins in some offerings, tends pricing despite the example, holding versus to hot

the flip areas you than other sand there being side? holding pricing extra margin of some even harvest of you’re the what are is, categories aggressive margin is, presumed question more the normal the on pricing? side where from squeeze to maybe line guess, on offset And guys I So the then, using that to are

We No. me. way. struck at we that just Lightning don’t don’t really -- look it

areas, businesses where mentioned or now the there soda two us little some smaller in think, forever. the the those different to as sales Again, year. we help are we the gas a you think we hot the on in at I business, we’re there more necessarily on better mentioned, back margin look -- period I fresh business find be -- are I years were the can but still net-net, strength that The the of you two-year even don’t other But margin. aggressive end longer, things -- And with no, -- a of of hold price well foods -- in in thing and a way places dog the like two as doing some over XX% day, earlier harvest are the the increase years, are about areas. XX-plus-percent we getting abnormity had business for where bottom ago. that now, line, each the and were improvement than XX% travel

So all help things those that process.

looking should start take basis, margins you’re categories, go-forward we basis? any may other on on actually really not margins if to a drop But, a extra year-over-year some to presume that

raise provide prices, of line. years ever bit. guidance, point look but impact an we bottom little we about how historically, to saying, harvesting want percentage a bottom than you’re volume. first inflationary and but do. If sales, the lowering it’s by a don’t that keeping another we it. ago the and changes we was to don’t And would old we do, of which the environment, incrementally margins the more at driving at get we of But kind day, was does all little want comp Well, any top That that end can of -- in the the line that does

Okay.

I end. everyone. much, very Thank that’s think on you our it

soon. We’re you some talk to and answer to questions, all here additional

call. concludes this Thank conference today’s And for you participating.

You now disconnect. may