Costco Wholesale (COST) 7 Mar 242024 Q2 Earnings call transcript

Ladies and gentlemen, thank you for standing by. At this time, I'd like to welcome everyone to Costco Wholesale Corporation's Fiscal Second Quarter 2024 Earnings Call. [Operator Instructions]

I would now like to turn the conference over to Richard Galanti, CFO. Please go ahead.

good everyone. and Demi, 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 time well to from that involve statements actual the and/or filed today's those in and statements. The risks in by uncertainties uncertainties time are as differ These to, may the include, those from with materially statements outlined as but and public events, identified and cause results such to other risks risks indicated performance company's not call limited reports SEC.

by from 'XX, as not the law. in company by quarter this presented or February for these a at foreign and weeks only for are speak second XX-week press of XXX(k) U.S. share a March per statements well intended XX-week results comparable gasoline as million year. increase an the and to sales share to the employee comparable the in of sales special worldwide retail except per accordance made, billion weeks. as second statements, they the deductibility a quarter Comparable $X.XX the sales This Forward-looking supplemental diluted X of from fiscal prices last per result X.X% retail operating the not update changes today's extent undertake release, to following information benefit are results fiscal the net second of the share negatively the Reported second billion year-over-year in fiscal reflect X. in and XX-week by participants. Net February Sunday, tax or approximately the $X.XXX or as $XX quarter comparable last due the ended year. $X.XX sales were impacts ended billion, and received dividend XXXX weeks of $XX exchange billion $X.XX $X.XXX reported our per The diluted were substitute GAAP. In share, the calendar impacted plan for date X.X% the included diluted and quarter up required in year's of are quarter as net comparable sales as with and of for came $XX.XX Net we from the does excluding XX the $XX.XX the in past sales shift from for locations income second XX sales year.

for reported would gas excluding Other E-commerce was in international, Total quarter an of gas we excluding X.X% X.X%. been X.X% XX.X% the Canada an and the the and quarter, and X.X% excluding X.X% FX. deflation X.X% company FX. deflation X.X%, ex reported X.X% have and U.S., the a reported FX. reported comp comparable, the ex FX, gas For FX. for and X.X% -- and XX.X% and gas

In metrics, frequency or in terms of second the our shopping X.X% traffic worldwide X.X% increased U.S. quarter and comp sales by

while And gasoline up approximately to average minus. X.X% dollar positively and negatively X.X%, by by sales the sales or X.X% U.S. impacted U.S. currencies price X.X% was ticket the in relative Our transaction up approximately foreign deflation impacted worldwide

Moving $X,XXX,XXX,XXX, the $XX up down membership fee the income income. or up membership X.X% We year-over-year statement fee income million quarter. reported to of in

of members ended had At XX.X QX represent XX-week XX.X%, the during the growth rate of second sales. renewal at XXX.X quarter. XX% at executive QX of throughout and quarter second in XXX,XXX we worldwide quarter paid members, the a And up worldwide the up of up X.X% continues. earlier. X.X%, XX We In and end, in little increase over paid million over XX.X came is U.S. members, continuing to similar last which quarter. terms and renewal rates, Membership XX% members at household versus Canada second came with last cardholders, XX.X%, from paid Executive million our and rate million growth weeks the quarters. an a year, end, little with X.X%

income line margin. next the gross to Moving the statement down

margin X plus at core basis do year-over-year deflation X% X matrix Reward, by quarter plus up and down second basis excluding points we Our plus and first reported reported, again, and the coming both quarter minus X% little deflation. to gas X% deflation, merchandise, was plus points margin year-over-year the gas and X in And ex basis minus compared plus gross LIFO, with on excluding last higher gross gas line XX.XX% up plus in X item excluding is columns, and X%; reported points year-over-year X% up in the year X, that X XX.XX% a points, usually and and reported all X%. deflation. basis told, plus ancillary gas -- other, X%; X% -- and basis deflation; X% Writing total

by own charge to the was XX on second own Members. I their you year Executive had a no the basis again, last quarter with read margin lower higher deflation, our the sales, plus from nonfoods number was We ex higher plus their sales, and LIFO coming of and increase negative. $XX points gas Ancillary again, points. deflation, being year-over-year ex food in terms gross higher by of e-com X a year. X points penetration basis our In credit terms X driven while just by margin core and without of largely on X in were quarter plus Reward, with fresh higher X basis other gas core in margin and up with credit LIFO gas. by this million both basis points by positive offset were partially second basis or points, year-over-year, LIFO gas. X% points and being year-over-year compared core-on-core sales basis X The margins X businesses -- and the and and sundries

Moving to SG&A.

X.XX% basis year's last by the X.XX%. by lower points, excluding point, higher been or this coming minus reported would second year-over-year year in to X quarter And the would X higher, have higher gas be Our basis SG&A deflation. compared at X.X X was in

X and the the lower compensation, plus gas QX component the being plus higher. plus XX of would component XX operations minus year-over-year, basis regard or X. And point X total to of and points In higher matrix, XX; and Central, X basis or points basis be points. deflation, year-over-year basis SG&A, excluding Stock X basis X point X plus doing better. With X by terms deflation. operations plus higher X, reported X higher and ex basis so minus points or year-over-year was

included scale increase in during March's which extra line. of year a basis to year, X was compared top last As to ago, the -- a hit X wages, SG&A about the we past point

wage X -- much operating were of by central, income or the of about raised estimate basis As X than well line, wage X X first normal. Below straightforward. was quarter that in Canada. We points this to basis X rest I in those related wage year, basis and U.S. X better impact basis the XX to the points, roughly of the by mentioned, was points, and of that that higher points the FX, year was rates so we starting also pretty the versus new increases more dividend. was less interest going Below well income from was by and interest interest to year. versus $X.X We'll average quarter favorable the which interest forward special cash benefit payment of last due balances income the following as as see higher income January billion increase million income in other higher year-over-year. million $XX million for an interest $XX line, operating year. $XXX last was the was the this expense driven And This and

rate tax to the income of second XX.X% QX XX.X% terms our in taxes, quarter at last came in In in year. compared

tax tax excluding rate have benefit, a have And income Overall, been paid other up participants. including net of fiscal being items, XX.X% in effective again, The earlier, benefited rate at discussed been in XXX(k) tax in basis. discrete note. the up items year's would of would QX, dividend special QX reported tax currently to coming XX.X% tax And quarter year-over-year. A benefit is this the of to XX% the -- excluding the As rate, XX.X%. special dividend the XX% our deductibility it reported was few on dividend-related to special projected income instead in 'XX XX.X% be from range. a

openings were in Costco in them quarter, including we warehouses, second new unit, new been X X Costco the Shenzhen. There's China. X in our Centers Actually, it. our China, sixth terms X That's press in net and of opened U.S. Business a of new and In locations mid-January about in and of sixth in lot X warehouse the wholesale

from there people all over agencies And up estimated opening, an XX,XXX under to more kinds from than have just members including Kong. We are XXX,XXX and seen there bus doing we've at things shop. XX,XXX of members over signed currently, Hong trips were tour

XX and for and XX estimate relos, the of U.S., and locations: openings, the For a XX we each Korea full in And fiscal on the puts new XX units. total opening X in plan remainder that X, including 'XX, a QX X 'XX, net for of total we net of China. new year increase so in X Japan

our items it radius X be getting for online Shanghai month. the Regarding CapEx, the in $X.X in day. the fiscal the past in our second attention And to there, about comment to China. Pudong, the XXX It's -- sometime following range. One ability well that north remains of billion. social billion end, about $X.X of This $X.XX to area by of Shenzhen our plan we Monday, the for month warehouse approximately China locations X-kilometer media delivered as delivery order of members in launched, from items within will lot to we and that additional as the in And billion, on other launch itself. was year, an quarter spend location, be it our a over

increased strength several e-commerce, sales and showed very of silver. by FX of XX.X%. QX sales ex terms led E-comm recently, areas, gold e-commerce In in in

was were cards well, as gift appliances As very e-tickets. strong, and very,

items In many via QX QX of a 'XX, up As well, versus Costco record-breaking million are completed deliveries. e-commerce. of and Logistics of ago. Much sold X XX% deliveries, those that over year we -- enjoyed

we in share you SEE offer what's mattresses. banner, sales the in In explaining our over past at several the categories. Under price a believe price with competitors big-ticket and propositions terms much members the traditional of "Why we televisions, tires, included done computers, members better Costco?" job months, to banner few price compared we we've significant of the and Buy our the value e-commerce appliances, you PAY!" "The to is

repairs, example, include, retailer, You of of to at course, take traditional website nitrogen lot a compared one installation, a can you'd Just hazard Costco?" hazard extra, see warranty. have that's rotation, disposal in warranty a tires on for flat less the give you and balancing, you Typically, road or high-end pay if a we places X-set these of road other online of ongoing to our to tires. "Why prior Buy X-year

very of anywhere savings items. one of of the itself to additional be When all examples in Just items, tires put price where these close you us. to the on the it's differences the XX% of those any a from XX% might

I'll additional comments Costco top This quality seller value sites, sites Next on Next at brands a exclusive Costco my Currently, are members list, our -- direct-to-consumer allows to talk costconext.com, on allows are the there development. XX pricing. for of access about platform. in -- to XX costconext.com with there brand about couple sites

to calendar and year kitchen apparel, there. toys. pet, Next to as Costco to continue accessories grow bicycles well sports, offers sites end XX electronics, everything from likely as about to this to and home, to from improvement will home We to with

quarter previously. we say, should couple It's our A efforts. to out The new continues both site. Progress Pay out. browser. million. on homepage that's loads native XX about now rolled are all both around of application e-comm, recent in be than You rolled good to February and mobile, e-comm XX% online, visitors million mobile, up X of and last were X out important it compared our business, now homepage mobile seconds XX. and to enhancements. web App pretty our currently in February, less total members the our to a app during and In X.X done digital Apple via orders, seconds iOS. downloads native check on And when and we mobile made Needless week,

great-tasting recently for couple the courts, sandwich awesome. freshly items X.X-ounce our baked side, In a with we product a $X.XX, great-tasting $X.XX. latter awesome -- churro new On cookie for the It chip this with a food chocolate other on. comment completed rollout week. an and to is It's the of the replaced being of turkey

quarter, headquarters, over to done of successful In in forward with notwithstanding Costcos very This Issaquah, taking quality X X in $XX.XX, our the $XX.XX, items the successfully like we Asia near price, estimated XX-count from is sushi we where can first we flat. many from $XX.XX down glasses for Kirkland of from more have the our from street there. offering now what In planned price more throughout the looking that we Three everything comments crop addition, in first open to Berry can. a to approximately X we pricing. batteries and for to several we're years years pounds fully that be with it we're proven flat, future. A recently program blend essentially in the fruit has inflation couple $XX.XX where $XX.XX category $XX.XX in The even X%. Washington be reductions from the essentially QX, from operated operation to quarter, that of to last opened Anecdotally, We'll -- future. a countries our was Pellegrino of across and year-over-year of to simple say new both seeing reading sushi $XX.XX and XX-count frozen in about inflation. And was signature $XX.XX in to

we we first mostly sporting overall in to and be do prices lower across continue a to good quarter. inventories sell-through are want and reduced costs the items And channels. are Overall, we've And -- lower goods garden and We that. the shape overall, good ago. SKUs a with lawn year-over-year. always versus prices. Many commodity lower there had to trying So seasonal have all costs to due good -- our in set freight being during new and year out

been issues, late. that often, In about planned just are or weeks X couple terms delays, now some of we've of for. mostly supply chain but shipping a and asked generally There

with challenges, Panama that ships the way routed. has an while Canal because No lot the are being issues back there challenges. contracts. of issue changing in-place of a then, to First, Sea was about course, Red with do of lot A pricing meaningful the a

our ended same to X, to compared February past year. retail calendar turning weeks Finally, the sales weeks Sunday, the last X this March results,

-- increase month sales the came our As weeks an $XX.XX X.X% of earlier -- announcement $XX.XX same net year. in did U.S. to reported announcement billion reported versus at just release, for we today. the X an retail in and for last X.X%; comp billion, Again, and of XX.X% X.X% company for other X.X%; a a e-comm for of Canada, X.X% with February, XX.X% at coming ex FX, gas XX.X%; X.X% a total X.X% ex and and and XX.X% international, in reported FX, FX. reported ex gas and The

traffic the X.X% comp worldwide was up and X.X% February for or in frequency U.S. up Our

total last deflation which transaction and by year. follows: sales dollar approximately for as total impacts February negative and by X.X% negatively comp versus year-over-year reported negative, down was currencies worldwide X.X%, the Gasoline relative gas approximately approximately X.X% X.X%. Canada impacted comparable about impacted includes by the per approximately FX Foreign total from to Worldwide, the about sales other international and of the was And company gas X.X% price deflation. by X.X%. gallon selling average down price negatively average

In general regional terms follows: with the are Northeast. Southeast, the were comps merchandising of U.S. Midwest, highlights and categories, as strongest and regions

of Australia, In saw international Mexico, we Korea. strength other in and and currencies, terms local

were digits. gallon. mid-single up mid-single Fresh up positive single optical with were down lower price Food ancillary single single merchandise pharmacy, Food in and And gas low high on performers, nonfoods digits, were in court, to low foods highlights. per sundries positive top the digits. the and a businesses were Moving were digits and digits.

of many weeks to back close. have how to share so we upcoming way. Since results and following with it ups all. an ups sales Wednesday, downs our our turn ending the and will quarter, March for April Q&A, thank to say the some downs the to I we're of honor going each thank take Demi Sunday, to many you and before for moment It a public for thankfully, in I'd to turned who like in all after X on lastly, and terms allow In privilege XX, April of And X, you market absolute years, more and been announce our call. color results, you fun along I have Costco's provide on to both has so, but me informative one hosted doing December many some you XXXX, do and releases,

that joined David very continue and, it to As role the will you the straightforwardness been XX to effective I be a certainly filed, but of be Millerchip was next positive that, a week CFO including fortunate. The on March Board, surreal back for and and January. Demi seamless people, the journey call up has Gary turn you happy we and and It many it a our from good to early what February, that after a I Costco I such for. XX-Q will know, will and to great company It's second news, ceding With have you been today. Gary open announced our retire, all in quarter transition. are known with it is late will last bit wonderful of along with it of transparency great be provide Q&A. to including Josh, to

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

process thought don't to I that appropriate That's like And the to membership, sure no membership we first come wishes of could sounds said increase profit wait that's right. levers this on through best My part itself, Richard, level is "if through. an business, one when," framework happens. parting when could cost that, it's hear enough we for make you want question all drive guidance. that a question framework this savings, -- longer business. not, you. metaphor is Thank you product to is to in were there be your of come thinking were I when that but you know the the earlier and since presents like give it savings, guidance. than on the growth when And a to in from was price able and as

all when But not that -- function exactly way, -- we're that mean the terms joking well. know when, in the and don't in smart figuring the a out Costco. now. We if all performing down slowed loyalty, of direction. like most -- do of of given would fact it direction the our in things now. are have right metrics that given plenty economy because, Sure. left. in would really, We really things still. we I in simply all believe do little let's be to fact continuing I why. done member the all We've we by those going the aside, it's not are -- if, right us, wanted it's that bit, rates, else, And we new everything like runway sign-ups, feel renewal think factors terms And and -- it a we're we hey, got is It comfortable business it's that we're it right the

simply So mine. not I his Gary, not joking with big will we sure, be it not on It's simply cute to I've it. been some some formula. will, think be point, I'm at do It's still trying about it is measure it. And of, watch, a analytical

the where our has And time. because consistently say, be very business leverage then regret of to comp Richard, question. that's to comped when X more, it tougher one And won't north maybe over used may Used to -- expenses. you X I to another it is

you cost lower ways the can even does leverage still baton Or there then you do you are If Gary, threshold actually more? that that it the to apply? as spend of point? be business think where structure And Ron, framework, the to and hand about altered

was others because COVID. probably in But we whatever and Right. at were fiscal little was a the SG&A, and more then last got it's look given the and Well, that I up even through in 'XX, fiscal in back numbers at and And goes back. If helped in haven't lot up to first on here. that it at of X.XX%. fiscal the the look happened. I remember X.XX%, of inflation whether And XX.XX%, I'm X.XX% at it's at a life, now it's then down our -- it when I XX.XX% go 'XX, few years, I say bit we to it these of 'XX, looking 'XX, down was -- quarter COVID. And just and to would crisis in came likely before in it

I going sheer to never we was XX, above lot we again. have just of than said, a get notwithstanding, So frankly, slightly higher well, productivity thought. to continue But that the it factors when below remember change. XX it's And we is, high

given Some COVID The market going of and the to it else be But that we seem news, to to of through continue take we're because haven't share. back continues -- able we everything good was given back. it haven't that on. news gained be we good to

that on fact items, there's I less SG&A. think the big-ticket

comps of what We sizes for whatever would to the tough the other would on we'd question, would And went be But all freight, but a change that it at lot mean? figure freight SG&A, the you the less still if ask SG&A. that X, end. to about be, is rhetorical it would things pack sales continue That out. if be is, things

Chuck Next line question Gordon with the Haskett. Grom comes from of

company. started My congrats the is question Richard, on on day culture. X at that a someone career basically great

You've philosophy first, shareholders always third, out. that employees was played said, customers and clearly it second, has

it, this resist company looking going team of intact culture to So the curious I'm pressure the new at going and of the keep how forward. from non-founders some is

XXX and care your changed. unlike was knew they the It's and frankly, asked to be, has was takes everybody XXX in of have He remember extreme in value I I not and before XX nothing what the a same extreme if think going first it Board exactly if mid-XXs, and that number Craig said, his made for And the that, was least terms that would "I no who before employee in? after years else, and paused after and be customer in be successor whoever not taking view, the minute help and towards my Sinegal and them and question whatever Jim we doubt XX, years of will the were you're for retired. add the that raised just Well, and of I'm have because increased operators, asking, certainly place, XX all, and joke was, am fact at the that of higher." And he have people matter there I we do. ingrained that's of me what for years have voice. run culture. people and -- But so and is we that you of important is And is, Craig in so how when merchants about And talk the management, have born to grown And always strategic up and XX here. been intact. -- as whatever The culture changing and I Ron, we're CFO our when by is it ask important fact we're now, here to the serve company? this

very you through he when if law, X-hour week us, do can night. the that, your well required care can that's -- respect reward orientation, last then the is Gary care Just your shareholder. And of which It customer, supplier. of at the take Costco includes sleep to you employees, your joined had obey thing go I one take the

Richard. That's your Enjoy Thanks, great. retirement.

Thanks.

of with comes question Lasser from UBS. line Next Michael the

Best Richard. luck, of

from mature highlight metrics are reaching in metric? saturation direction. the not most which of the that moving in the that see previously to that club especially the more moving of there mentioned starting any locations signs Can either metrics a in And peak You membership or right direction? are per a right standpoint, are a some are you

No.

be working numbers. I there. First about be is with membership I times and actually, of in right than Everything from just trying -- why we I what I out that are and standpoint, in mean nobody not, When But that right said perfect. buy simple changes when to at in conviction saw all, example meeting, them working even we assertive more what's is buying you well. we talking wood, newness, things Costco, wasn't these human direction knock metrics. with when with monthly about most, now. on general, the excited just to get in I -- merchandising just sit budget pretty gave our I saw was on new pretty and a great going aggressive big-ticket we items at changes And

So that levers got a lot we've make to of pull able work. we to know thing this be to

so have particular said, perfect. is because nobody no, just most honestly, I said And I didn't any I examples.

experiencing question Understood. customer pulling rest in experiencing the discretionary to of take seem so My the areas down more follow-up to member Because these opportunity communicating hard, than a the aggressively as -- what you're some result inflection cited or does business? a To Costco actions prices? with degree even aggressive an you it to is those in the the of if categories with aggressive drive either an merch is the more the business. on or there discretionary had the in And what like Costco's seems of is rebound are gen way retail. improvement changes, levers like move you like

are absolutely, And the how it's Yes. different is on you which what it? Circana, that nonfood NPD, -- -- called industry product it categories versus is product you that to be It's shows used we're north industry we percent. or the and with XX%. When is months, something thing tires, appliances couple last more the flat than look up that several weeks a of Same of in industry. at like

focus of up everything XX%, an And end will to XX% be because so everything the do at happen. But coming now as the not example, you let's is that's buyers, buying the to that, great of a ways say and can't how day, constantly going -- improve increase. global our new to there's that pricing do figure power and to with with to time things, that out do up price pricing and every have with commodity the

a a category. view, have job. we're but job those think our and items, XX item of not They I do to on. lot we get of suggesting do charge and our less, XXX, in know know business, feel I out a good if good just on savings, And buyers And that I'm soon component that's can more, good an we as very are of the very issues. very every cost as others a in a working not that. XX And I not about there first we items Given get pass that in don't, religion. we phone XXX of immediately getting

strong, because we've relatively year we're have Now that from able last some been to sales helped. that lapped do things and our have partly

Next question comes Benedict from of with line Peter Baird. the

It's congratulations done. behavior been kind some my maybe versus if branded Any well. good of branded? And as volumes the maybe Wondering up. talk going pleasure. doing a around there. some get what's And shopping Kirkland, penetration, what member maybe private about the of brand on companies can to you packaged Well are

Just about view curious your that. on

not There's trade lot down. a of

-- business. sometimes private items we're certain have we to when more drive able we Although more that control over label CPG

branded going happened -- that of was we question years as if years And seen more the X%. brands the as penetration the well. And But then and inflation was some look recession to table that over did to we X.XX% are without the then to of seemed versus on value So and we was like that years, of to increased year the -- economy that the XX penetration. penetration. X.X% of really of a are seeing the so X%, be both. But an And ago, grow last X.X% couple at change every sometimes. want to increased we difference? we're provide a you it brand is, were seeing -- We X% gets when there exact work question the back X%, X%, asked peaking in was was like even ago at haven't a -- see into Kirkland we seems we numbers, couple it looking a to year a there X Signature

anymore. a little as out. see So We people were, But in my view, don't as that changed. much bit switching that's

Got gave on just it. Logistics, there. And then delivery numbers Costco some you

business. internal the in of there, of just the growing How to a drive Costco that Logistics? that trends? are meaningful further know, ticket that? is going little penetration big penetration go back Just point? of within maybe maybe at the kind Logistics don't step this bit, to initiatives I What's terms Costco with Is Or of left

hate the it's mattresses big-ticket and allowed spring us particularly XXXX. to did much some quality drops. furniture to items, outdoor and better screen And cost value and X.X Logistics televisions, brought now sporting the be in Innovel, that in word, -- and before called indoor the on and before we furniture, that, we and goods. And big it's year U.S., furniture, in done down of bought the the on delivery strategically, I What overuse about patio times appliances delivery indoor we're Costco and million

drops million delivering did So about did a Both refrigerator, installing for off there. none a of we taking disposal. from extreme X.X dropping and sofa old the of anything a are ourselves. new washer-dryer and dropped, But drop the to which we is recognizing those freezer, in or U.S., difference away the the

With million of XX% million is windows like believe this -- you of this a delivery Innovel, X which for drops, about you of introduced choose, -- times. think X of windows some with and rough over the drops -- X-hour over last choose. the just us. X-hour the probably or in can number them -- I XX% reduced X quarter, We've the where windows I you We've them where can where X-hour about acquisition million categories can

improved That's out one recognizing the job and categories. appliances, meaningful quarter greatly the we're percentages nice of a that. of or last how a things is last to it a an grow small of industry. a something opportunity have think some those all month still the very total. categories, percent constantly look up of good to better getting about of we're all category And is the different of value. And percentage you that we've of categories doing of -- and But function So lots the we like they're continue we our us of fact doing have things terms was it we deal a they're low but we're better, shouting XX-plus at when in

Well, of Richard. and luck, Got it. best again, Great. thanks

Rupesh the Oppenheimer. Next question Parikh with of line from comes

also want offer your I Richard, congratulations my retirement. to on

They're points core-on-core I basis the margins. up, back So just XX going to think, quarter. this

driving performance, that? if curious anything drove particular there's that Just what strong

not year side, is piece last it had is -- we nonfood on extra thing well, biggest of where the Well, to the -- the a comparing markdowns.

I coming we think ago, such challenges it late in when the had some -- of time things of the overseas items chain we case talked last have been supply year-over-year big-ticket because of some in about probably were after that for was, nonfood containers. year down season the a

a So chunk that it. of probably was

meaningful competitive terribly being said fresh always down that is as but -- the big side, as that's There's well. a don't year-over-year and on Fresh terms And little of there's change is any down coming. in little I it another again, On that little. thing a up that's being bit. is ever a we're view was a of and bit that competitive food something I it

Great. And then maybe just one question. follow-up

controls have expense the guys side, quarter. you expense this did On better

changed growth did curious few sequentially a just by percentage what because So points. the rate decelerate

costs. at higher you I little last think if of in out of I to control actually, XXX-plus over we -- every town your budget can't other the one off better I and things of focus. lower, doing budgeting. happen weeks kind that of came word the head budgeting, the the meeting they the the came labor operators the in things, table sales got our X people top At budget terms across than meetings, look And from with are you are job said world, at. think in think, all my And a budget just someone of a the those which X%

control with it certainly And to to. so have that. a doing need certainly to being we to of when lot expenses meaningful that. we increase don't And try done focus and has think wage we We do by a not

with line of Our comes Scott the Mushkin next question RX Capital. from

to came rafters Never retiring superstars here. should feel like jersey your like truth. you be the Richard, like the I we raising without you, tell to

congratulations. So

Thank you.

to the Hall of So Fame. we'll have see CFO

of So made. some things, that a you comments your couple of

You're And how even doing envision Is we think vis-à-vis that you in should of China, maybe can X. from about I you going that outside hour that something China? the delivery think club in X U.S.? to X this expand said

most was already that way, doing function. the with Instacart we're Uber. we've Texas few as got notably have the and shipped day, I a we end here at people, in with down a a same-day little in bit Well, same-day delivery a of test think But in the And Southeast.

that's party Instacart ventures here. it, these like it or is third there, Over a doing other

just, it's China. that's club warehouse So it's to not new. the something It's in new industry

And of launched makes elsewhere because could You I part just, look there's the X it's social publicity But it day again, page too, how find of terms something gone and the in sense. from and of media, a lot mean all stuff. in that nuts ago, certainly just it's but been it it's that getting in many hits days the business. part it's

that's the to the clubs going talked this organization? X years, year. that we What's trend Is of Got said it X to it years? going this going it. envision XX you Like think out Where you do and you of And then to do should new do we -- to capacity how and up? about the you're I as XX? net we something XX think move over see

let's units without what time, years we next the XX unit you the a if we year who certain in were up COVID as probably that the back, year XX XX period, and that that X But countries the over see when for not, the excluding the XX next somewhere over and of about X- a if then years? said, of plus a generally, I a up going X-year At What year a looking shutdowns year. trends or targeting, you think years There's couple because somewhere or only in and in little. -- there excluding knows? to say, you think collectively U.S. But -- XX was high well look per do XX like XX. was it it I at there, -- saw did minus construction the there, hopefully a to numbers, few years XXs about as hit,

comfortable the I think generally doing it feel. Could sense way? we we do that's this Yes. Yes. that Are more? we

jumping part to of think is he here out weeks locations that opening, X existing usually like great that if for or do not in not not, opening sitting visiting X, operations, in an new the business. locations, of a several least colleagues X but X around, sites. is a a headquarters traveling I example. around I get an my from regional month executives Ron say I only time, hands-on and somewhere, most and there's mean not days, operations, if they're or visiting such but at

from the one Minhang, that new promoted in XX to that were in think I to you thing -- and Shanghai, want China, few very there. countries, that Taiwan from a over into so help wanted particularly location that to or can And we years new in and city move first go. fortunate the be standpoint the first jobs locations, of next a in back one will people employees move to that other where train And number in you get newer opened, is, so XX want the a we had

X we have us then then whatever. X So when that helps then X

merchants All know it busy take all is we slow. very well. So particularly we're the and as and I operators

paradigm, And that so the work range the going think, at and heading kind continue in something that's we're up. then to of XX I to

you or whatever -- just construction early And might that mid- which delays There's the found -- to new might fiscal there's X a or for X timing. think year that's delays Just for simply our from ago, a it to and XX. budget now I month have be, now is pushed something, was late XX, summer or quarter this or that fall, XX whatever moved oil you it's year.

we're and go going probably next XX-plus that XX-plus for years then and open good there. to pretty from feeling I'm on the So couple of

from comes Greg with ISI. question Melich the Next line of Evercore

of the mentioned it's retiring. the say surreal, surreal, word feeling you Richard, chicken. the almost $X.XX I'd as

just like the It So looks touch thank most April? ticket are things pressure. I over that some sales, years. into to merchants X deflation AUR and the want you to traffic One on. all inflation Is recent turning is in -- and seeing more March you're with the for more that growing X% as pressure. help the would seeing I I guess say

again, that mix. inflation on think costs if I the the Well, -- calculation a is and number based

too February by a probably would -- it few tenth. a X% And closely a the quarter, -- in close. that's if look ticket it's still I relatively was down and up -- average the then in think down couple was I tenths

I'm change, Some is a mix it sure. of

is Even that. it how may -- we if sales yesterday. pricing. side changed, in of some some that's of of the on of from be And gave you terms I of And and we package advantage take cost it the lower the underlying on hasn't the not some not exact costs examples about and

flat, good number, that ahead, seeing today? looks pretty from the are looking what So merchants

Yes.

phrase a to the few a lot budget upscaling. I -- there's X of ago, think used I last minutes there's I went weeks think when -- the meeting the in I presentations, ago,

But think right. we're looking buying with right way. phrase we'll being feel, right. that in the are and so I far, buyers way Hopefully, I ahead mean positive be think we I conviction. a an offensive now

with question Instacart e-commerce to side follow penetration What now deliveries? would if wanted other my the second of be e-commerce U.S. included and you up the delivery on penetration. in I the Instacart the

in, a don't more the but don't because on checks than X% out below million And include person so $XXX that. retailer, something which the that front X%, lot. that to in-store comes -- still X.X% a Instacart's is end, is buys we and X.X%, at Yes. we it include

line -- X% top number. you'd to rounding, on the add So you'd X% add depending to

Well, thanks enjoy everything, and for retirement.

see I all. you to hope

Kelly line from of Capital. Next BMO the comes with question Bania

my you. And to a been congratulations to Richard. pleasure. I Thanks, It's add have

retail stands ask wanted to with dollars. where and media Just Costco advertising

that what thought kind was where of had update that Or line. growth I share hundred million. today, think last company's the the you're willing experiencing few in if on down of with the is curious us stands range a the process just I in that and just investing to

of always successful it's or that other X been we've seasoned giving than the on to brought opportunity people us. focus. out, And an know In last advertising know in past. that it's there. we there's money a X We very out point there's done caps the vendor numbers buckets, or of without more in months, business are there help end in Well, we forms whether this We've course, assured, Costco of done the banners there's and over there. online or going we're whatever Rest to to in more when save that use $X on going several placement. But it we're to our years, or or lot -- if like can just be the give it a said, we some is, own buying always connection, last advertising customer. something, we $X.XX $X.XX to can

there's continue I this certainly as for there. mantra But will well. think dollars side that on ability out more

about our big of Some doubling competitors talked X retail in have X or what years have. they

to I for that. for there's more a continue little us think, so market it's opportunity a us, again, to share lower grow

to roll maybe follow use. being decision method I the could you with on pretty the just for strict Apple payment just up Pay? can notorious Costco out -- And is

just the share? e-commerce that, process you do your to you economics on maybe expect business can what So that and thought for any

digital with -- a wallet, there's more our as not members. as as Yes. e-comm, will There's help on And many cards that stored we're doing not for well.

help. that should it something it's So --

question Next Cowen. TD line of with comes the from Oliver Chen

your and retirement. in This is Katy to course, you for wishes on Oliver, best of

you know to changed, a gap Kirkland Just elasticity, discrepancy? that But -- wanted has touched talk price year-over-year? national the bit any price I bit Kirkland little call. unit especially And brand little been given the gap that impact price how to on a versus how has earlier there about the brands. on

the impact the least what have that -- be definitely national that to XX% brand we we was than compared it at the leading metrics And better, national from in if it. a regard. seen as those as quality at for. and not least has I to Well, savings historically, view mean, an sell continue good, brand

high basis but years prices, dramatically we've pulp products, of the got or a toilet -- for where last towards something and last terms XX-pack it's seen the over And not think in of of many be little more have years. don't items Probably percentage some in gone bit. years. paper we we of at to paper can the in changes of XX-pack that's energy, the penetration low of look couple when like savings say know unit I mid-XXs. because that to exact a an what costs, price Signature. process points of little little over a numbers, dramatic show price because freight But used a risen towards bit up a a in XXs, down been tissue towels, up on greatly -- share dramatic seen of XX-pack several all of that, iterative a Kirkland that's those you've I'd what a in I things we've -- an the on XX-pack of goes if increased. And or because have market Costco

then follow-up more bit on the just are tenured stores performing a stores? provide And angle? productivity the from a Can how a domestic just just international well is you store and as of Great. discussion little openings unit versus growth. How as color on the that store the

a difference. always there's big slower. think don't markets, little In a it's I new

Iceland Auckland years we when some originally Sweden ago. or So several those in or or opened are of France or -- like

have or to they want all they the that more. talk a Japan -- may not frankly, or -- X because once you share you we start traditional sell you cases, tend we upset may to to it's a XX -- to local get some country going market to always little years vendors You're big want vendors lower. X out open, also enter. And start ago, to before question not all some local want the In

so a members we the years. in most made the in I recent as changed Minhang, in who ago, all one news just number those years few sheer being when what, last up us we help Shanghai, it first China things and international about little of bit think it's on signed And grow. Certainly, the the opened X example, based everything.

start, lot than I year, Each year faster a have So think. start lot we we faster before. have a the

more that's in this units. a fiscal think interesting thing year, certainly I I of I And mean, so U.S., XX is longer the than there. We XX-plus do. a is XX, has look big little we're the in takes one open, -- what's And are slowed people to No, think the -- is I thought have going if some don't whatever, difference possible. lot see which you we international a interesting But ever we U.S., runway asked, it internationally? to have down

asked putting got If X to the have we off. U.S., at ago, got you said to in that now year some now, how XX-plus. But we're bleed by many this the in us of locations, slow had be would not doing It's we've in we these volumes would point. years down some that

And still of point. as got overseas. to we that going continue so then good you'll that's see up on And plenty And well. ramp one

Next with Truist. from Ciccarelli question the comes line of Scot

like done membership sharing? sharing, It that you court things some have business on to there's concern you are et food membership in gives like that seems cut you from growing usage things Richard, from the guys cetera. something down a issue nonmembers, seeing

No.

of first think it of part is sometimes little reality. a -- all, the I think is I greater than storyline the

bit a a was more During more COVID, membership we -- there bit did little little sharing.

it. flash into X dad's credit You member, mom with not the of knows? of just door having over People self-checkout self-checkout, or do the to they maybe one several through advent going when one would one look your you had you're in. And last that memberships, with individuals and card the family if you not or at had the to cashier. card And then you're we card, was and it the front your walk shop where coming and in not, years, show the who get membership allowed

still relative Why view of -- had we "I just over Absolutely. did. so it? members, that was And they?" fair and think and probably level there's So to from meaningful, there of where period million little X to We up but bit, then shouldn't it's but X months, we or some sign-ups pay. from the getting also that terribly and but do. new complaints changed. it of members a I -- increasing we we it's ultimately XX saying, not million Are months the XX was right the did shore to thing abuse But first, we about privilege. an small warnings more it's And a needed --

that I to -- Yes. it. started you mean was answer actually

kind for we've that of membership. like sharing? cut So like the in what example, with Should in member you've seen Netflix, some see seen as we to expect they acceleration future, down

And you like testing still all, reviewed in seems issue have of because, Well, share ability much having easier it's bigger on show a was in. card few terms too, in. In walked Right. much sense, I it to had a actually Netflix the you this of when the we're in or done that first doing your a and And to scanned years. believe, card that, we've for when walk be you U.K., electronic.

making more the as than it's members would anything everybody lost that nonmembers as slightly nonmember all small just signed up we're so be to that did. that, profitable say I were And sales And it think the -- we it's hygiene will else. about extent sure -- than much I

again, Thanks enjoy Makes sense. and next the stage.

Thank you.

comes Guggenheim Heinbockel of from Securities. question John Next with the line

your retirement. Richard. Congratulations, Enjoy

You'll be missed.

do BOPUS many don't and volume in throughput and/or reduce Scan you know about any of points I and So think when like, clubs. -- you think unlocks like you sense your have costs kind pain are and/or here points? I tested there pain But think and to really when Do some wonder make more there, you you things things Go. that didn't about

improve. first biggest way, the system, locations even XX work and of $XXX with is lot U.S. doing points, The than doing will would fact with this inflation. over Never XXX the would and if doing of The million thought merchandise which you continue we've years think XXX your do. ever pain no, volume we to we them over and ever of is million? a of -- answer be no on more ago, $XXX XX we're pallets announced I all, have challenge through you flow

in driving busy And is today." up We by that only it more a so And members sales. little say, there. don't in oh, doing efficient or sales will we're making or go the think but third more that We're And mentioned biggest here. too that increase opening X/X but to of with anything not "I It's answer by significant X/X something fourth sometimes the can't increase membership seeing cannibalizing. -- an base unit I specifically. not of find existing of things city, a want always David

having be inventory should shortly is warehouse online. we're of -- One things we doing the

-- in might couple the are because -- I in than yourself and that, but the online a look or the a the in end cheaper now be online buy be higher, have you when a costs where it would on or go we code to in months, few know you So be something if pick And room ZIP items. a typically at the up But of says, you nonfood and you is few you it soon. location you will the typically it shop X location at day, it to will more physically, there. months it higher go -- be we'll -- can you shop say people a smiling online let the if many in cases, of buy may few particularly

So that will as think something I that's help that well.

And secondly, think tell, there is e-mail more better any you to seems outreach. getting way be mean action. about to to it I and call

Is of any to there that of e-comm think middle outreach? productivity now. driving pickup? of is some X you're the of days tell the about which And I that spring, the in the way

tell. a there yes, And Absolutely. is way to

digital. of types these again, promotions in It's terms we things. with lots going He's mostly that. IT in new clunky with of And like closely we've a all merchants in doing merchants and lot from couple the of to by our person with drive Again, day of into without and a to there ability do desktop. some in years We and at brought seen, items are improvements getting less working app, some more of our team terms sales a ago, with looking of but operators built a detail, charge it.

from with comes Horvers question the line JPMorgan. of next Chris Our

Gary. you, aboard, miss welcome Richard, and We'll

in And on Is it's to And growth you've Couponing it amongst the customers how MFI, observed? much the becoming And the more it's total broadly, did MFI you think accelerated So how you that club impacted FX acquire has channel. responding? mention more the competitive what year. year-over-year? like seems your really do over escalating? past peers you still are

increase got last we tell XX opened you, I we X-plus had -- a to new like the new percent members. months, and locations, in X% we in

right. have At So discount, not there's much would other we're you not places, things a have we things, deeper -- basis. do we've at by you're on ongoing that an ever promotional but day do than not all. can't a of a trying deep done few increased say the we I types goes even get And we

things no, different. anything us new value so the the nice it's that we mean with helped of Yes, are think has hear I we're social I pleasantly like media the And not And proposition. surprised doing fact to sign-ups? by rate have. and

we're a things in no, of doing so that lot And regard. not

anyone in XX-year one the just question, that those that your or on digital technical like renewal door peers you the a from include XX% quote, X comes that of one rate. renewal to year coupons? And The about talks does of

way been Yes, we've it same the doing forever. And does.

line America. comes question the from Robby Bank Next of of with Ohmes

well. as Richard, my congrats

a change question. happened best It's anything the change I program. could do. guys ever credit You like will amazing. there fees the thing program that late It's Listen, quick the going card me, much. missed to or be with rewards just card very on Citi anything that's issuer there? you rewards any love or Is the the

There day, our nothing and headline done Well, of are that Look, economics. change that's point. the to of but it we've this talked that do, could them what we happening the issuing we'll and is in wait levers the may other end the recent the at see. new about to past, have bank, at

congrats And on retirement. Got it. your

you. Thank

Champine Next with Laura of Loop question Capital. line from the comes

seems It of on overall renewal Richard. Is bps just you a went on that that? it's I a wish imply XX driving and do the I'm on nitpick in some to markets. If out China the or that you and good flat better retirement, rate. U.S. go sampling rate's as in might long happy not but is be what Canada, to that international going renewal think --

but we lookie-loos from opened whom a have up, unit XX,XXX only that a by Well, exactly I countries members of renew. close XXX,XXX divided in about of When first is. households total in later many sign it of think total to Asia, and don't that's not members per year just if you -- anywhere warehouses, we're other are China location. number take we'll of XX,XXX the all, When what number to

Canada. once will for it have see. then X first U.S. time, in the We -- the countries or just, continues rate renewal grow you it exactly to new the something that. nonetheless, years in start batch in XXs that's we than a XX the that's the and low XXs. over at some And first higher you best, years, next with to might renew X Not saw -- what more But extreme or that's than ago

you that's affect -- Shenzhen the China, we international the to rate. ago X.X when whatever in just going renewal opening So X unit or in years opened

the Canada, every the In other rate of all ticks operations by and bit been when at outside we Members. -- with other of XX Canada, Canada. helped look and it's like up a renewal countries, U.S. generally U.S. way, XX the look When the and also little that increased we U.S. year at penetration Executive

smallest We have us I last years. that And also has we countries everywhere. in of believe, countries. helped don't but in have that's, not don't countries, the a several several it which auto-renewal, and in The with units, all number

you Asian Got it. club? so have you a households number expect cetera, in be sustainably that do clubs, serve clubs XX et would mature, That's average you in other markets, those the households Meaning, them that of to or higher -- in clubs above there? tend China, Once to new clubs helpful. they can an

Well, it is and it does. the answer is

on Sunday, random answer I was in the there, to at the a not was there was at So a Sunday, business, you X months picture a was over And Osaka, I It it see. move but went is wonderful in couldn't a place. opening an I great. random in And after Sunday, yes. opening October. -- Japan back was on

has the despite fact value everybody housing that think well. plays I yes, people have So not fact arrangements, that smaller the cars and that despite

line from Jefferies. last comes with Tarlowe Our question of Corey the

your on retirement. Congratulations

items, like category that big-ticket little it a bit. relates it As has to discretionary seems improved

Just on wanted that of business recent AI, basis. go-forward the the underlying just the curious as improvement impacting with the technology that see bit what a then a understanding on trends? secondarily, little made, you And business you've to that seen has in to get enhancements how

of terms I know isn't, a it small we're we're other sales over and evident months, the explain doing of comment some comparison, or it piece believe completely mean a big-ticket of couple total I almost appliances, the in better still just like to the it's even I particularly of our XX% very in percentage think a that very of of we then industry. skyrocketed. I big-ticket things at very, which in you the if was it is even and to Well, the end was year-over-year it the day, don't the if us. And mentioned, is those value. some discretionary, Sure. side that increases of did it categories like on XX% last

I And continue. so it's easier of so such to small will you're take think market share percent when a that something

fit. regards our you, working We've most And and headquartered be great to might CEO about how job an absolute talking, AI, are whole privilege. and to Seattle, will a doing we're tell everybody The Gary in and because things it's of early where I'll with fun. been third-party everyone. merchandising thing There's just heads IT list ones to story come and AI I that had operations talk us. out large Again, it to of the and is for that thank including question been it. we're a I But in talking like to of in the As our companies, innings companies, and it's future. Well, that. been it's with that miss a see -- appreciate but the

good next a day, shortly days over So speaking be and sure good the with additional you to a day. I'm have of some we'll few Have questions.

conference today's concludes call. This gentlemen. and Ladies

disconnect. now may You