Costco Wholesale (COST) 30 May 242024 Q3 Earnings call transcript

Thank you for standing by. My name is Krista, and I will be your conference operator today. At this time, I would like to welcome everyone to the Costco Wholesale Corporation Third Quarter 2024 Earnings Conference Call. [Operator Instructions] I will now turn the conference over to Gary Millerchip, Executive Vice President and Chief Financial Officer. Gary, you may begin your conference.

thank joining and call everyone, afternoon, you the for today. Good pleasure how to Costco am a my start like conference excited Costco team, be quarterly first by it's the I'd of saying I call. hosting part to and to be Costco incredibly welcoming. team been has whole The as imagine, X my And months have Richard alongside you lot a might been of first working fun. investor the growth. Over experience and and and appreciate in value the It's months, myself the firsthand this time also with immerse how to been and continued whom prior you facilities many investors, great to know company is communications. I've current spent analysts role, company's positioning visiting through my clear recent several culture and for I warehouses met it's Costco of and approach

can't come the be of and has expect. I dog confirm promise promise Galanti Richard the I price you've match $X.XX level hot to the up I famous recent safe. same that transparency to to to become and able media want humor for, is speculation open some also Oh, clear dialogue can to While

before about and talk Ron have today's interest to you have talk a be mention from a anything good like Many about results, join would take it is thought also I Before and joining I Vachris call. the idea hearing in expressed so of our we Ron Ron wanted we that can you discussion, add to also to quarter? he the few would questions. Ron,

Costco, growth have working we're I welcome Gary to for to Gary together gone that transition to the company. you, excited ahead to has part board forward on I'm as look report to and well, from Gary. Costco. the our of on Thank And opportunities very and again, happy very Richard very

make of we couple jump on I transition. leadership the a comments the wanted to into quarter, Before

as with worked many for side-by-side mentioned X As last years I've Richard calls, previous President. [indiscernible] the has closely for on including years,

to the seamless very our the has quality incredibly to transition results our [indiscernible] Gary conference host other. how their working proud to I'm I Craig Consistent our of And have our Richard quarterly and the focused a commitment has will on few Communications, with so to process. Since business we for been closely merchandise consistency best questions. been to a world time for and deliver January, the members is believe employees, value members. CEO ensure I the reflection calls, continue answer my join his each are of and I managed Investor and around that of intend the to best teams with

let's go Gary, to to back happy So today. portion field I'm and questions Q&A in jump some the for the to results,

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

the comparable foreign we May today's press XX. not are and accordance required release, with information by exchange, reported company statements are presented quarter intended for for weeks and sales, as Comparable supplemental made except in substitute the sales third XX as results update prices operating 'XX, date gasoline only are undertake ended GAAP. In and net the changes of as in Forward-looking fiscal a the from speak excluding they to statements, impacts of and not these law. does sales

sales diluted site intend investor & matrices. quarter X.X% weeks. diluted available of U.S. X.X% make primarily $XX.XX making available per new and billion walk comparable every sales famous share for last International We quarter, X.X% costs the from inflation the locations billion, comparable on quarter. Reported led and will per Richard's $X.XX $X.XX all up diluted Last of a including charge adjusted share, were adjusted an quarter Other charter total I I FX. $XX.X for for billion $X.XX X.X% $X.X this last year. discontinuation are our slides activities. Net we year. to million from billion comparable a or net income and in summarize company third Presentations. sales today, to Events per or our gas for results comp the share, was the through of slide or following under the or came inflation The gas X.X% X.X% share information in pretax information FX. the X% comp reflect third year-over-year this $XXX was adjusted. X.X% $X.XX third shipping nonrecurring X.X% These this or of included increase much numbers, Before for third the were and quarter or adjusted quarter and sales Canada for of year's in merchandise retail to presentation at

Finally, on basis foreign XX.X% sales both reported were e-commerce and comp adjusted a and exchange. for

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

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

by Foreign XX points. negatively impacted the basis points XX positively by approximately U.S. sales price currencies approximately sales relative dollar while inflation to impacted basis gasoline

X%, $X.XXX fee the of of million excluding fee increase reported income. Membership We down income to income statement fee or FX. growth X.X% year-over-year. Moving membership $XX billion an membership income was

QX XXX.X an and Executive worldwide XX%, our in from was million worldwide at at same XX.X% last QX At rates, QX rate since of memberships, over year X.X% executive ended The renewal sales. million represent we XX% U.S. have paid members rate of end, members versus XX.X XXX,XXX XX.X cardholders, the of and members, QX of year-over-year. XX.X%, and X.X% QX paid up with as increase million end. terms household end. We now end. X.X% came up Canada renewal end, paid QX In up

and compared Our third reported excluding last flat gas was points in to XX.XX% inflation. Core year-over-year without margin X gross inflation. XX.XX% higher higher in points, basis rate quarter year basis up gas points, XX XX was and by basis at the by coming

In from core year-over-year reward decrease higher gas, had a last to to an year were third in basis from lower We gas This in sales, points. gas point, Other partially finally, with basis or lower lapping by offset charge $XX XX and in for this QX on was their benefit in with coming by core QX of executive X% credit terms negative members. LIFO inflation, own and points, pretax QX. by credit basis last compared and credit year's or QX million LIFO was And of e-commerce. basis the activities. charter margin was year million the inflation. $XXX penetration both credit a This $XX basis million was higher impact all gas a excluding by our is gross our charge X credit Ancillary year. XX lower sales X LIFO was margins core without points, driven businesses $XX excluding points margin XX higher was basis related This following shipping LIFO LIFO inflation. on other points points. X basis and X this million no

to Moving SG&A. on

better both at our in excluding expense SG&A compensation line, results was million by foreign year-over-year Our rate quarter. interest year lower basis year. SG&A was in lower for drove year income basis points by by better this wages gas flat versus X.XX%. basis inflation. year-over-year SG&A this points, compared was year's points, $XX core year. productivity the And income $XX lower year-over-year to in XX this as operations for quarter and cost quarter gas by income the interest And improved gain impact preopening the third the reported and Central an offset million or adjusted other of for basis and point despite labor flat year-over-year. Below stock was quarter. exchange by operators operating XX discipline last warehouse was the inflation, Higher was basis flat component without coming inflation. X by were X.XX% by the and a great lower XX and increase The SG&A the XX last lower points from gas was in interest

In year. Overall, year-over-year. A tax last in income rate charge net our items reported related taxes, of other it few to compared up terms in was XX.X% XX.X% QX was of XX.X% QX year-over-year. discontinuation of to up charter was last income XX.X% year's shipping activities, note. the excluding And

opened terms the U.S. in of third X new both warehouse In quarter, the expansion, in we warehouses

the days our Nanjing Additionally, Loomis, had Last ago, openings. California. seventh opened in since China building in week, X we we QX, more end the X we in market. opened of And

locations; the U.S., For the and we year net the openings, XX plan in including X total of to bring XX a X full open the of would fiscal for remainder another in new XX in X to Japan relocation for 'XX, X Korea. warehouses. This new

members saw estimate bit approximately themes values and quarter. great was $X.X really items capital ago expenditures, and those expenditure of billion the buying This by resonated job our have and merchandising year billion, we between items softness of driven we conviction. strength capital Nonfoods full spend was Regarding with a be key lapping sales QX in highest $X.X during Diving our by really was 'XX core that high-quality will some aided the our a $X.XX but doing year with a deeper categories. some billion. with teams the comps into identifying

leveled our category department exciting more by food Within had the continued team sales lawn Cookie led has Chocolate to that the added health and and as items, the returning with businesses, the are of growth toys, momentum success the was Blueberry Fresh quarterly and the of & new this in great Lemon inflation number Kirkland our was items quarter Signature Chip including showed off, Bakery purchasing aids. Morning to beauty Foods Loaf with sales the As year. reinvented and and has food court court ancillary strongest garden also our in that a members discretionary tires, Buns.

lower of front, constantly are drive across aware of value combination referring more member costs led that In food is that volume through last offset we goal ultimate was unit pass are mind intentionally delivering new from inflation benefiting prices. We're item XX% still all value to least all all with and we in price and the same we with quickly or that value by And reductions. in close vein, it's to prices freight buying furniture of of to for wherever at. X us. and was cost satisfaction winning SKUs nonfoods. inflation slight nonfoods and decreases sundries for in delivering deflation, with year-over-year. by their being strategy our value goods Across high-quality branded on ensuring deflation If QX. We for by in from inflation, flat brand case teams when goods, value deflation of in the sell can costs and inflation that Keep Fresh we in at of changing we the in capturing speak creating unsuccessful believe the some possible. our members potential incremental delivering we all sporting the core our to The so selling versus merchandise, the essentially are items national lower quarter. signature evaluate Kirkland nonfoods providing our incremental On hardware, are a would foods we're what

and Kirkland new are new of a Signature well. men's released we Kirkland shoe Signature very both which facial walking quarter, doing wipes, This

SKUs warehouses monthly reduced a of a price they and the Signature on where existing they of These examples Pine where lowering our to Kirkland our from $X. items, have including are prices. have country number shrimp region just came and by out and shares $XX.XX Kirkland Signature of and couple exciting to of prices $XX.XX their We introduced frozen reducing that also each lowered new recent budget items meetings Nuts items

Turning now to digital.

Logistics quarter gold excited and Costco gift these sales bullion, and We and was XX% getting initiatives Logistics appliances. the were led is the a playing up better traction growth continue a with In quarter. in and to experience are app appliances, both Costco greater for the members. that are end-to-end website role providing through e-commerce in by and to members. about cards make Total the value enhancements key silver Deliveries in

to continues to curated and vendors added also the Costco Next, we total QX, marketplace grow new our X in nicely, bringing XX.

up Our X%. and total XX% a million. with XX% the was app and value X.X more new downloads in versus up was about up downloads order average million downloads quarter, Site were traffic ago, year than to bringing XX

You of delivered also XX and seen Uber U.S. the consumers from orders we in relationship in have allows Eats this new all to across well ability may order as with recently Previously, Costco Canada an expanding are agreement Texas our Uber. through the that announcement Eats states Costco as Uber

working We expand several are coming to international to our this countries months. the of also partnership in

increased membership to sell the will to agreement allow In access annual to customers, addition offer Uber's cards globally Uber us the One gift Uber members. discounted and Costco to

of for our ending close. will announce up the May in quarter after we XX fourth upcoming June results will with Wednesday, Also, open our releases, Q&A. last year. And the fiscal have the we weeks it terms ending for quarter X, XX XXXX, X, X, on fourth weeks now that fiscal Finally, remember September X our will June weeks that, versus sales market Sunday, in

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

We're thought about the as membership And Is And fee. is that it P&L do, that intact? levers membership that is an have if a stated that the way take you of still offset this you're you stab to The you trying whatever we've at it's the to growth to going middle enough was to at enough touch visibility look didn't it inflation way to still question. model. on EBIT it? described in need levers the the deliver

And now. about -- Is membership you're Simeon. you're Thanks, Yes. fee [indiscernible]? question talking where that increase a

Yes.

will delivering increased that We membership open time, something reach any looked timing increase is we're now when every right years. seeing as previously. that differently we I test we'll concern that it's and value since that's we continues how still I think But of the the than probably we back are that we that toughest about when nothing and about a in own terms I or last talked fee inflation would I rather to those in case of performing, the where of few be And marketplace renewal determine to members about historically we And I to still And that. We the We've what that. really and it we the time it was the about the extensively, business thinking fee. last are the competitor as rates. last increasing of communicating feel within period what's revert company, calls. that good we look at we have we membership Richard were evaluating happened more is the some joined our it years he's we're typical direct see is. that kind our we be good about at the of considerations view high on before the we're the membership increase and really than cycle. few think anything really or when feel recession, talked beyond be But don't to the -- the shared risk changing in fee. fee we were over right about There's what so. comments X we of obviously, about talked feel the know course, is very point it around if than and and significantly

surprising several It's better. opinion own we enough. a ago. that you the of we're have about at on still Are there's could any your expansion. years you members than surprised have Just today, just been curious it Can you're think more warehouse. I It's would holding per if you even in the perspective, been Fair you U.S.? item. lot runway in Okay. than anything looking giving on thoughts, less? the aware ask probably U.S. Do more what at your be thought Do have

U.S. previously I you close new more and in know, about warehouses opening we're we much we as of many as see for that only those talked year, would continue thought as continue this think significant be the I And run warehouses, the potentially in -- surprising runway U.S., opening still the and in it's the in out U.S. to in will we know we've future. XX runway warehouses of to to net new

sort in be drive more growth reasonable that very And us. foreseeable runway open today, also, a for new to count if to that for warehouse because weren't are of at market least the it's is for doing and we is us we think over proxy I frequently warehouses. And renewal is warehouses. new creating as surprised able shop what increases think for of it membership continue those with XX still significant the it's when warehouses time the more XX shopping future the see those what capacity to new our to I'd be in we half in busy And be well. rates for filling engagement members U.S.

we still see in open but markets see also international warehouses, U.S. the of as growth a course, in we to So the well. I lot opportunity, think continue plenty of more runway to of

Our next question Michael line Lasser of comes from the UBS. with

There's from about couple the times price make remain in quarters investments, do recent investment announcements competitive? in you think been of need of sizable you order a consumable to a in next price retailers lot making to

is are DNA. everyday a part I of we This this I our competitive that Vachris. mean daily No, think is on basis. Ron

pricing of Our buyers all weekly, them review are each and daily, on top we month.

are very are we as feel where to today about our moving and competitive to continue forward. as And we we runway good so be

like capitalizing monetize through year deploying Costco that retail in has so Store, store aggressive given great model, in amount so, of ever any some more is, more technology of the some question trying media. leadership last the the on evolution And in or changes is Up it my there data on thought things form of with the to being the given to follow-up Pick over Online, or Buy of the in the

think -- answer all no That's fronts. I to on and yes is those the that

right We're in our to categories, on there. we're and aspects other going online, electronic rolling warehouses warehouse, we to working be speak, items have. expanding those buy volume out can't in the are now. limited currently all based but all are that that We in pickup scope on in that We expand is as an expanded always we televisions

moving so key have for as aspects And brick-and-mortar forward. improve real we and our and opportunity one the forth. of do we we engagement is that so in them as relationship going as and other a travel priorities How to with yes, warehouses be see us. Technology that member through online our such as well

technology a we drive So member well see as us Costco a with opportunity is lot to for relationship move great the more forward. business also and enhance as we

continue So with see a we mean proven expect years, past as continually the data. members. And changes, needs we a innovate for major But changes for wouldn't opportunity strategy last on then I to absolutely. great XX we're innovate. I now. we've going to to have of data, our done the as management the We

We group there. our have expanded

now we we and significant well. retail personalization potential. like have some see some and that program us team, forth. a We've expanded so in and And as We that upside see with runway some good great media. good potential for Things

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

curious margin over it? just view, Do adhere you on Gary. to the been to XX% team the again, the on think steadfast Richard going you threshold? the margin and ceiling, Congrats to Ron which XX% company dividends how, more, you're your this you has I'm to for front? paid clearly thoughts Historically, earn going Are years. have and

of XX% years. our XX%, been life that part No, for has many

our think can buyers' best And they aggressive and objective, pricing so is the our get that's value. on -- how goals I deliver really

that there's So I move to plans see capital. -- don't no

just too. thing on maybe Chuck, build And to that, one

of back opportunities Ron's ways these how that I new member I today, unlock echo in think on that's XX% to think opportunities I mindset that company and we the a the we're great drive and through members the about give continuing comment those of do as much some strategy think about momentum to to media, opportunities delivering to call, you and for But we see have clear find are Ron engagement, think mentioned so technology we in growth earlier loyalty the obviously very value. us that member [indiscernible] the completely member again, I value. really

Okay. then up Great. build question. And of to kind Michael's just

digital Where Just focus you are? the be wanted today? think And company weaknesses the think your the to think on to What e-com. where do Costco's do biggest strengths years? you get the high-level do are you in going for coming thoughts is

Our road that's teams we on the what digital that's mean, in of work works going. I is, the great and have, have right e-com foundational. have. merchandise lot biggest of is that of we the that the brick-and-mortar. where a value for our us the got course, technology, being very The done systems now strength they're A map

So quicker better times site, type of those delivery the fulfillment, of reliability things.

are things. And will those sites the following and that, So then that forward-facing move improvements -- the come in see of you'll that changes forward. iterative

that So that. deal I members does working is the personalization think big a much I a business. job think on inventory towards correlation map better I We're think do better the of we online. But that could online also warehouse good warehouse for we've a a got and and -- to road very do

our one the on could members is app opportunities. functionality of But app. use greatest that Some

Your with next Securities. Ciccarelli Scott Truist of the question comes from line

Scott Ciccarelli.

discretionary your feel the than needs? got economy level the strength better of your spend that that starting the willing funky, on following to and once we've members with a as seen rather are So little -- suggest to more given sales does

and coming I've division I in and hitting It to business got discretionary I you fresh the foods. But seeing some mean, categories have I categories. that phenomenal goods, that very we're both out us you does great categories are have sporting great mean, winning all tell way. are people really are that lagged rejuvenated seeing, Toys are as Home domestics, our items categories definitely indeed away have on tell such and all to bit a values we're as those and nature. have we're leading a and our up softened quite consumables of has in toys, furnishings, really categories now home for from discretionary that come the excitement. food those look delivered we at a buyers dining that and and bit spend strong see with post-COVID those the And that

today, obviously, a joined Are C-suite presentation, there the changes of could call. the given had Ron, we then you other potentially we changes? expect And Fascinating. some

again, mean, the there's has our major been I every I that us like team some business. working. model is this merchandise is said, The we Gary working the region been team contributing value no around planned. resonate time. running for and But changes company on that's is It's a world. great do addition seems to in Great nicely. to quality

innovate. you But we'll So execute here needs convert any future. are. the tell just I you to see what continue -- changes members' be relative and well. can't to and near to things to to We to new expect anything continue want our sit momentous We'll today great in

to role just perspective the strategy new me, from well. and my the the impressed new the observations with obviously, clearly incredibly company, maybe the Scott, to is And being culture and to for add very working of early

priority that continues is support and the to to, really, really new my make with first company the the have So we a acclimatize being and momentum culture to smooth to going sure forward. transition to enable is

journey the I with technology little the and bit other about on earlier a we a call point, talked we're And data. think as is on

that work that's CFO, and on mind team there's And the continuing accelerate hopefully, journey us being my in can bring with and help that things into so really, And that priorities I the Rob. the new to journey.

question next BMO Your with from the Capital line Kelly comes Markets. of Bania

to and the the pleasure love a go on and to strategy to maybe bit you both I personalization. little Ron wanted Gary, media and back have call, slides. retail just

areas. Ron, department. a these or bring this in think, Gary, some I or I you that perspective unique you think And area maybe both to noted higher hires key of

all coming than -- So and your would the I model help or along I it personalization? Costco's increase different Media SKU lines? us can spend that those unique X plans and these any in Retail Is just of a guess, include size count for fronts typical guess technology retailer would at on these in And areas up opportunity in you in anything because years?

Sure. color add and Thanks, I'll well. want then as first, may go some Ron Yes, Kelly. to

I is, think about many to say joined think companies talk of doing great today we lot the thing, about as and of having the Costco being where -- would in there the profit relevant is area I of new how you a company your lot is, alternative think where first about I a from comments areas are opportunity that streams, guess, today. are things

that alternative relationship. And expanding then of and So be overall from way using business. value the strength the in in and generating The business revenue of from the revenue retail today the in think very to members streams delivers which delivers relationship I say would is of payment we a Travel program will thirdly, to Services revenue sort membership that new company media viewed I driving a other large we of any areas as company. have, in co-brand have that values unique pretty But retail.

channels. isn't are though that think us them in opportunity to a significant it of the business both space and which that for value digital that can into of tap tap have in the in and with that actually say as comment that something delivering towards. through So today. we for on the Ron as path is nature of in not still we're we because I something relationship creating into grow growth But building deliver ways our technology and as members data I earlier there's and would sort the an the it's that that and warehouse unique mentioned we're data the

make as to would because, I unique size But today think think you're early in opportunity we the in been it's to sort that from elements our bit are different. about help from of model right, little know there our a little also some that's what a it bit totality company brought team and drive got the I to significant to we'll we growth company definitely at certainly member it we of the runway as the of of with do reinvest earlier growth company. And believe overall. the mentioned I the everything, lot as it, though, accelerate to through would that something look think a really in for it's

have would says. mirror I to Gary what

are unique a we have We do -- model.

members. all relationship a with have our We of

Our responsibility and respectfully. that wisely use is data

yes, will -- the feel -- our we don't far but there be IT we some see see normal business. as will spend, CapEx IT We as But really our that be we IT anything there don't of requirements, in be in investments. so will of that spend. change to trajectory course the some look As will that future, be

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

want can Where probably personalization you you wallet not do to promotions biggest right? new and think your build where do coming to back opportunities different again. mean you biggest items members that why I every going cohorts. think little share, outreach Where into just are, think the wallet are be is further on they personalized from one share? When warehouse. to the conceptually are of buying I you the go about a you opportunities to but do

John, I'll go ahead out. and start

continue in sales. what's warehouse the in like active how opportunity the of and enhance keeping and warehouse biggest -- you just on the can the tune near and those think I is them going we awareness our on members said, drive to

do needed costco.com Costco. people equally XX-foot value to go of as talk I reasonable compromise about fair see think phenomenal important good. opportunity as We digital to as We see moving that never forward. Personalization that's is personalization. warehouse. lot shed. the that knew greatest a with treasure And they they that's amount never probably in a here And that want the they as a we our a hunt of

so enhance the know that are. how how that's member and experience their member? this our want does that would is experience. changes personalize we do we we digitally. who And team that on the with us definitely a to And focused is that improvements does everything improve But our don't detriment move to we it DNA to And could that there's some have

you been step -- necessarily a Okay. and little on a and talked follow-up, I But you little -- know bit kind down normalize I is COVID level. there not regular back getting And level? core if process maximize a the quarter. as know right, fresh to pressure this a post of margin. about then maybe Are that Maybe I now idea you but to as -- certain maybe fresh Gary, some think we core on bit core-on-core to thoughts had back the back a through of

Yes. Thanks, John.

bit maybe quarter. looked little core, the on color more during on Just how give it played the of you to kind out a core

support, to be to lower the sundries, Fresh year-over-year, if and a fresh core for So X make strategy have foods and categories think sure main about deliberate and slightly continued between in us very that's nonfoods. would you bit we're are And delivering member that little a as place and drive to more value important commodities we're now. us engagement inflationary for for the especially right think a seeing really we member. that's still some

was what during So quarter, the basis improvement part our sundry offset, was would overall. improvement have that by Food call. was to than very and on it flat nonfoods actually on the much But the XX perspective. which you point led pretty in been core of more from the plan as mentioned,

And teams that the feel were the principle the merchandising during way -- to managing the value did. good we delivering the about the that pleased it based staying we work with the how played we're quarter best balance for true member. on out So while of all

comes Benedict Baird. Peter of the line question next from with Your

for Ron, you. maybe one

around behaviors kind to bit. your Just slice you there observations cohorts. about nonfood the talked any trends. better think bucket over the Is You is Any behavior, other you maybe membership talk call change base, you just your back last here back maybe to that little maybe interesting or several about months. of to Scott's question general evolved just the have member how Can income a out? just ways the

Just curious if this anything environment first my you else of question. historically? reminds That's

environment driven you ground units a see very chicken healthy right really a in volume we which category It's our as department, Okay. price now. And being a driving volume beef breast, take a of our members skinless boneless everyday and nicely, such growing meat on lot very lot from our new what as lower of there. from is

While growing us wagyu great at fit a as beef well. for and Prime are

executive strictly It's blowing very can't sales value and nonfood [indiscernible] much members we by They're set are people some base continues higher doing well. both that going floor. driving newness is membership and driven our -- from just our of that and force excitement. continuous great see innovation bulky enough. in big of that And of are drives get a We have on the nonfood you very again, seeing So that because swing sides been consumer areas the out. that and tell our we're Executive at a engaging and that But it's, benefit really well. The exciting year that merchandise there. I level. is $X,XXX we both

Good.

a it from dryer next days. -- good the on We're in of So expecting to couple the delivered Costco sounds get Logistics across board.

Gary, grow several mean, So evolved different to be I And question this has guys would sources on, categories years sourcing. more, or forward second -- that. has Costco then on just that business, either as been the to continue been supply. your your view you, Ron something guess, you vertical just definable of across need I for looking of you going

your curious sourcing years? on you are over you might where view the Just focus and what several of today areas next vertical

arises. the you Sure. And integration plants. going going And own up optical lenses we gotten coke as meat price how into dog and our sourcing about of back and you out the at figure how we're and We've open optical infamous to need we the think are hot in opened vertical as at to going $X.XX that if keep and story prices up our to the look plant. grinding there. Well, then

that supply So saw things. demand. at because where point continue to chicken inflection going we was those look The not to plant we an to meet did came

have willing to and to So was we partner had we that involved because well. that get a didn't as area into expand

a a too, I that try let's focused be is is everything, There not no. group on focus and that have,

and it's vertically do. by they're can to integrated are and -- step business something what long-term Let's and that because here great need for are out driven to really you get -- there suppliers. do going we where we've needs a It's It the got partners we're we good in. supply run just equally us, not have to is going to be

it's so that using strategically relationship be in key is the future. And to going the

announce into. at this So But there's we're in that need to nothing could time to our going expand we that that back continue keep I pocket should we to.

line question with comes of Paul the next Lejuez from Your Citigroup.

on a was warehouse, as it's online pretty Instacart card Paul. could interesting as Brandon that discount is a Cheatham Recently, you were in used competitor at potentially thought gift This and be gift that well. because for cards selling a

curious, that? you any there from online learnings that So I'm Are drive just to initiative? is behind engagement any [indiscernible] trying strategy member

what it behind there grocery was closely charge an bring to really Instacart. to is having on home. strategy that is The delivered with that our about, We members is value avenue another work to up was

Uber will side at minimum, pay to and as we keep on their Now costs a to try they've got but people well. those

continue So how was to enhance drive and members really service the partnership sales. more do for to our we that

drive can but Uber all be that go that was look shopping. add to the or save the or so Instacart it -- somewhere value And tickets use truly is tickets to can and where airline again, member. somebody to opportunities job We those we and yes, else, at out members -- the our

market many you my past impact? when And into warehouse. warehouses year, you it opened other in-store you And than markets? react it. open Got new new markets, an warehouses quantify that would open Does differently do follow-up, how versus how feel you the over the current

react how and an based data realize building, member will we before and I have what open we'll building. they cannibalization normally infill our on good we guess can information what up -- judge

all for team able labor good within job. plan. And to where cannibalization we and that as upcoming we're of in is They're well. or buying our of does front normally to payroll things what very reality so that execution those the our get So are a adjust X% and the and of and type of plans

locations, gotten cannibalize to tell we've of buildings. probably good this out. and the we you, things to it's strategic say So pretty other year that open those cannibalized X at number And I'd have that have planning I'd

months. buildings may cannibalized Toronto that Some but X cannibalized they've Others middle. their have back X had be may within in the one it, one warehouse. around in built We sales

are you Gary's because So members where a can back point, to, the earlier club. those opportunities high-volume improves frequency get into know significantly

cannibalization, the And we so it's world. if you look around as would, strategic

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

having XX%. Is of sales, under X% up very you follow the SG&A, growth fall have? wanted I that gap place XX%, there you the reason to in any gross it's back margin X Ron, now still to on that much at keep couldn't if that

fresh -- was a we company we continue a -- I mean fair the coming that's the No, through Inventory well. had very very number healthy flowing point. good that's SG&A this No, -- We very to see had system. goods quarter.

counts Our warehouses did are line. a SKU phenomenal in job.

And job is all a the at of things kind leveraging so this line operate our the you operators a where one can when top way those well it's and that now, that tremendous our deliver the do growth of size we stars SG&A. aligned to

continued to number. can to? of I down we hate that but have So do that could that I'd say X%, think runway get what driving

for some Did pressure members consumers. was and the I hear. of traffic in to the and a insight know great a gas there's growth? that certainly And That's quarter. volatile on in the of maybe on gallon gas gallons point it acceleration help quarter, lot

We going gas, for X% people Yes. those well. gallons. the X% up in you to again, And up your -- that's of think gallons save things, traffic when to were also were lend all can quarter. I as that's on But

Or on up ago last was in kind that is Gary, And year trending gas. that Great there a profitability still or follow-up or a gas, down? Is versus quarter? of similar -- number. a

the a been bit. have would Yes, down profitability gas little

at of other you businesses, sort was that think may that the mention that me margin we we headwind. it looked quarter, essentially when created headwind prepared the the gross had businesses, and ancillary overall have I the was the heard for the that, comments in gas in rate

the bring results. close a in see reduction adjust you core-on-core profitability during margin essentially in So when offset gas we overall, inflation and for gas pretty improvement, improvement the us to did overall flat the that e-commerce quarter. But to

the a down. few ups points any on where It's downs year-over-year we And when fuel and it obviously, you last look been we've volatility So consistent improving, have I if given are see profitability. say, in in general, there gas last would was in you in that seen to about this in can slightly was think over you -- profitability. relatively years. But prices did quarter those headwind one quarter. gas where was time

much bowling drove And I'll gold else let how ask the about somebody comp.

question next Rupesh comes Your line of Oppenheimer. Parikh with from the

In mid-XXs, unit XX. it recent -- will to just this it's closer let's in growth. years, year like to that going back So looks be call been stuck

are to given sense want get from growth, accelerate in opportunity unit your a of especially some here? the just planning of competitors U.S., the that to Just potentially growth to accelerate

is It managed is before a solid locations and you when and I good [indiscernible]. cannibalization at infills talked do XX us. a When about number for look you these --

there out a As go infills, lot you of longer. into whole getting to start than little It's up in projects and a a some us open of little not tougher these a green there's take land warehouse. for

be So high some in very we expansion a things creative continues have to strong. to market. International infill way to a find do to

we business in, take longer countries that done. quite the regions bit to get or a of things do Some

We you'll the infrastructure feel XX staffing us. for that and to and I That with is building a good number flow. ebb up is to and leadership warehouses. XX behind these see So number our -- think XX XX, good

with support there. So solid we great open

follow-up then just maybe one question. And

a as number guys to locations. Uber you So of added

expect So U.S. would longer-term of intermediate as to providers longer over just vision? So in at you you terms guys maybe Costco rationale Uber like all more think the about to adding the multiple time? term, stores

cohort for also allowed testing we the did a members going in on there, that our we Uber of a expand too. test We are Uber us Texas. new and platform. had We see international in were -- Uber engagement time saw some footprint, to

that have Japan, out Taiwan, and expanding be we will where be U.K. in now. Korea, So we're going to grocery delivery don't

to many So years. very that good some has relationship for along been that with we benefits there had relationship, long-standing Instacart real were the

going open it to for new member as be internationally up So that it's very us the we us and and does some there think we for that engagement, expansion window think also well. good for

Horvers with Your next question of the JPMorgan. from comes Christopher line

for in you categories. of speak Could seeing on the discretionary you're is of the think [indiscernible] in anything some you driving particularly performance, Christian some else and non-foods It's innovation to the Chris.

You sporting toys, goods homes. and called out

some any provide gaining out newness pandemic? maybe of a share, syndicated over of the pull incremental while there, some of color you're So on those the these particular. you And of somewhat compare rising in also your does when tide data you clearly performance the some categories can forward in there's own suggest that emerging saw

great golf out lineup, category inflatable from at well. quick Kirkland for big we're driver you our the got been that trees dish great. strong of and values at items, Sporting Signature goes exploded have it The as items some in around a nice I mean as talk come those look unique artificial has toys in that was big, most is it that very the I and is been out yes, just really world, down which unique home warehouses one to are soft online. items exciting When all and items. goods furniture, pandemic toys, furnishings, clip. the the us in finding -- and towels, out -- think comes just have it's Well, if unique quite at sells definitely that Domestic outdoor you -- added are been a well. Swedish and post as blowing about are home those we've of import the back come category type into those We've decor categories that But have members going doing very categories. things. X-foot Housewares

categories. wins we're seeing different in So several

particularly Got helpful. investing it. peers of That's broadly, in really environment the terms are up competitive in heat just price, you And seeing in nonfood.

talking about You have more and looking peers recently. about to drive big step-up appliance are promotions in units, talking a some more others

So competitively? any you're what seeing on color

in confident right there members. be value the and of the There'll that I'm but staying always are to keep we position, ahead and very the with we're ebbs competition, flows that our for

but be things cyclical we're value day. going are to every a those So

we differentiator the a experience and the including appliance Logistics one to there -- making just thing that now I proving as insulation and but old delivery you on think the I on Ron, the is value appliances, earlier, we're the the for with members think well. of maybe competitive always the but of through the that, both Costco on very on mentioned do us member removal be and it obviously, offer price, acquisition sure Innovel the to And real mention

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

at welcome, it's to Costco. Gary, nice talking be to you And

So around the the strong, some around fee, Your fee kind growth what opposite asks and down, you but is fee? SG&A my outlined the everyone stuff increase all given time maybe first media of income question the of driving of sales the are to is need your the strong. do why you've

always just what it, -- mean because it. done So you've you doesn't should do

the fee rationale be would behind what a increase So driving at this point?

the I increases in -- greater -- that's allows use that I it the that member. the parts distance back creates for of money overall that, Fee go competition members that's to mean and mean broaden we values and that -- key from the and bring is our to prices. us improving operation it for lower one

So the focus. that's primary

some what's tease was there And Is I guys wondering, words, is being phenomenon? bit Okay. than categories Costco getting consumer a like actually overall. about And share, my these really electronics next are little and that other the driving guess what a actually In on in but any then better. out? talked kind one, ticket, you of question and of dovetails consumer way big really appliances your rather you last is gaining and the the that's to better I that improvements

We say you on sales think when our I can the of say internationally very would the would country that I the merchants that that industry share. rest spot seeing -- in market compared And monthly we gaining and on report to as market. and trends we're see we're that's fair. our performance you're

going lot now. value and And thing through of I they're we're think quality never and about is, Scott, maybe more that right been all would I think one what course, see consumer, the has we what just reading I is a to add important.

that so what sure to, Ron every that And and described as on teams laser-focused deliver, are day delivering the and plays earlier, value that we we're making quality.

many it's never hearing from offer to based And what what think more so on drawing Costco now customers years, relevant we're and we're and consumers. than I for members

definitely we Mushkin Yes, the residence. our at here like Costco

line of comes Kelly Your Edward Fargo. next with Wells question from the

a gets But can to And about but I ask maybe in you just about would like fee membership upon way. more increase it reinvested you your the reinvestment? you to bit little talk a to Is lot sure how little fee different you you that's about members. you about like of a that? already where membership come areas right, just unique increase, touched a bit time anything might I'm around of go. about probably reinvestment that where work thoughts have around this there around, would just like done think to

nice big we're is may we part the where in greatest and is categories more invest pricing fresh with that moves be time in The area that for inflation, X,XXX, that some price quite fresh the foods we moves X,XXX of have department to members. And It about our period nimble our model as more it time. you competitive SKUs opportunity foods see still be an we and as as may in for seeing are.

So able where to move and we're them, shift members process of best on needs think of we the around. that our the investment shift take in based and care and we would thought margin it can

going say up, monitor year, team the goes set as throughout spent it's okay, So act work to any there's continue we I in We areas. needed. be it wouldn't that if and as and a membership we to fee these

scanning are you Club that. do. It's how the throughput comp maybe And don't Okay. to online buy things still a park a to How How that pickup can quick club or part about it's I club you follow-up do just is but think remarkable you ways off Costco way you a of drive of it's to improve And like and throughput. to you yet place find on to know hard density. that? thinking guys both

over Just you to for curious solve that time. as how

goods that control a to, value -- The of and out can some that are online. e-commerce those over can our we now of and the Costco those experience move we how part Logistics, have great spoke out good of to bring things well. that And as like move we part business business warehouse Gary as

has We're scanners are we door to going continue some at registers at verified register significant technology. get start look when the We testing and it shown in our our up memberships a scanning speed. front are to front the significantly speeding that improvement all door,

And so that parking much is turns space quicker. over

And so those kind up parking of to with needed well. open help strategic and are infills where opportunities expansions things, gas those along as

how there several in levers we'll at throughput. to that to that So need can different we building and sure where we serve are best pull member we can the that look on make continue

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

with was done Ron per ticket big and What pickup there? Gary, some are items units innovation in that previously, thoughts treasure UPTs creative it a Also drag. previously, your bit on transaction of electronics really a hunt. a and you've and around merchandising

seeing and what there? And third marketplace and thoughts model marketplace, model your you're Just on is the would models. inventory alternative part love on concession the

views of what you member because opportunities as ones your and your still loyal to is Just well. there big they're are really

On your you impact? the about asking were transaction UPT,

in forward well to baskets way opportunity? adding that people's about merchandising see strategically going in it's an as if units thinking of you terms And and something

do success of -- -- or additional divisions But and bring brought to grocery But from seen business. that great consumables like the big or regions other want that's U.S. of will and item job world been are in the not good of that's have foods an a session talking And member you success the to and excitement we trusting into into the triggering creates We members a U.S. the we've there, take the with then the a that the just item where their buyers, really they we Korea that we U.K., that's where international a the in care our add cart. have of when only Absolutely. were in side. of one done when for the grocery we that the Taiwan in and purchase, it in impulsive

and our a forefront them So again, do a that they when great $XXX. in buyers additional exciting because they hunt. treasure big it operators up that our times and mean out in walk the those keeping pick you've that's they're heard time. spend basic with come goes do job I a of and of win on do been lot $XXX at a in and us. And few [indiscernible] for just with That's warehouses with people items the what making compel shopping, come the -- their to

trips on mentioned, Ron fresh. and up been maybe I with we've engagement thing the the been member by X%, because mean basket size in about that's as really nice consumables, that, and more Ron. opportunity why there add think food the is I for to just that's average has us with flat growing recently,

great of also it a doing a And member the of I good opportunity, frequency visits. so think and team it present more does job to driving speaks

size creates more of it us to basket that drive great well. So as a opportunity for

or way expanded their our see as for forward. a as within we future great value And value us forward. limited offering moving the really beyond driver we warehouse, marketplace in bring us then the to how can membership significant what's walls and members, with X I see is I our this mean question a And your do members expand growth to what's especially on to the we count for look opportunity our in indeed that, a to think, costco.com. we card on SKU the bring

and Next Costco future. bullish quite I'm in on can that So the what become

with us is that just Next are of being would difference we on curated be, for members. think course, very the I the for Costco as

tremendous So member we're marketplace is that is in for maybe unlike unique is But truly are. the a upside opportunity regard. getting sure being that it's we there's and sheer volume that who with and valuable making traditional about about there just us, consistent something

that any the last And big on question above ticket TVs. finally, Asia. electronics on And or on Okay. shoots green question

done day you've and things You of lot China, same region. a Asian had in the great in

love infills Just well. big you would progress opportunity there any update for the of as terms in more made and

Yes.

electronics. on briefly just think I

terms the referenced so to winning member data, earlier, we there seeing there, online the when to outpace we drive in what believe talked the from warehouses we the good with our -- we're versus it about those think look I continue the the believe we we So with we're we're trends a offer items market as our good a Ron in And of connection Asia, in opportunity feel member and that at markets past to us ticket ability a value great I particular, all the about that we of and well. And lot and to think, the of delivering. within of at look opportunity market consistent be we've with digital, think warehouse the with take really big in that growth. for some more would market,

like opportunity Asia Some more we're path then, and there's there's China, opportunities have but where that in sort we mature, markets. And the forward those market. as just new identify still right growth of in obviously, really tremendous in to fill open warehouses that starting markets of we markets significant those but journey, are

in this That is a just hours we're warehouse It's buildings. delivery grocery China, is delivery up within members. going and We for weekend. this big It's up week. will our be start seventh what win to X done. in opened been The able X our

and And things so some good we're out in we initially to program, future seeing good incremental of that. on look the shops that forward

Feldman Group. question final Joe Advisory comes from Our with Tesley

with which or A on been was other Logistics, share very new of that -- but it to the increase, did driving that would relationships with want Costco just what partnerships could or XX% lot strong? retailers be I some anything have is asked, ask, Was you helpful.

Costco -- you through amount not Yes. orders partnerships That outdoor, in. that big were is any deliver for the through growth the only is do that's a of past There furnishings in That X is trace no have as are XX% numbers is the those -- but And growth going of they numbers, report well. us almost that appliances, in only Logistics. see. that's We members part of relationship there it [indiscernible] the were Appliances just the the and we numbers period. drivers. Costco that

everything and point, you one price member [indiscernible], done resonated members you it's with what you that has And is been our sales what great time of for see a driver force. again, installation, Gary's to at of need all-in, delivery really the has value that pay

a you for deliver as chairs and I'll market. practical of had Seattle a mattresses, X couple example give well a TVs I Costco the Logistics X entrant me. to as new just

really I kind seeing think that with resonate the So that's we're members. of stuff

I to ramp then Costco small, I But that going? that is just that that how Oliver And was for do it's marketplace And of about? I sort just question. know still how will seems in -- that it other sort one nicely. Like see future? asking the Like you it's important Next, the ramping where relatively continue the a driver? of is guess, think. that basis this like is

in As are Gary to is but unique, relationships fully it curated and out somebody creating a is marketplaces Costco bit marketplace. These just our that with that go on mentioned many goods we're new as well. have this other earlier, suppliers, as buyers sell suppliers a for are our Next and there there's marketplace

only goods. been to then We've way not items can through we that into that find are has really This selling a warehouse. found Next some also that turn sell new our we neat bring Costco in

able swings for swing it new be items, newness, accessories that that expand normally other is sets sell So you that online, we and but to way into have have wouldn't fit and you that a you categories we activities warehouse. slides great categories a to testing additional sell ground certain for of a

us So to other really opportunity the value to gives complements but an partners well. as these business, it expand core member warehouse

a there. upside So of lot we see

and call. for conference Thank no conclude queue. our this does participation, you with you disconnect. now that, We have today's may in And further questions your