Costco Wholesale (COST) 26 Sep 242024 Q4 Earnings call transcript

Ladies and gentlemen, 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 Fourth Quarter 2024 Conference Call. [Operator Instructions] I will now turn the conference over to Gary Millerchip, Chief Financial Officer. Gary, the floor is yours.

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

gasoline as for GAAP. Forward-looking statements to intended are the speak net with as sales from substitute made, are information prices and supplemental statements, as accordance in sales these company only required are sales undertake and of not foreign comparable not date law. in a Comparable impacts and they exchange does by presented and except the excluding update changes

dive to opening I'll we over before call into today. Ron the now results Ron for us the joining some for that Now is to say I'm for financial delighted comments. hand our quarter, Vachris

you, good afternoon, everyone. today. Thank Thank Gary, for joining you and us

we year me a during to line lowest delivering execute XXXX, the possible comments of the on page strategy make growing the progress turn the a top members. at . the through on XXXX, let our whole. price as we goods continued the few year highest Throughout As year fiscal to fiscal our on quality our

as these leaders consistency financial company. identifying planning us fantastic employees led focal experience. is continually our the our our service proud the Costco to to view that we managers employees warehouse entire company. working and as and of of Most management team, point the continues culture our commitment be for of Succession be we results future The executives we're key our foster. team a continue XXX,XXX reflection on of member in incredibly As our to a who by of are the a they worldwide of

year company, from to XX Costco the fiscal core within of employee. build we to promoted is we those This retailer. helps highlights, like warehouse promote started at included This new relocation to 'XX, it XX% who and A managers. In culture we a and resulted as XX new openings. community XXXX, career as long-term an hourly promoted warehouse in and our are fiscal member other target net I'd in few mention, hit buildings. XX new of one

ever states building our included us in U.S. Highlights first and XX building Eau Maine, in Claire, our XXXth Wisconsin. to bringing

see coming has significant weeks in new Spain, buildings also of in And of ago. to being X our We planned continue expect to which fiscal in add 'XX. XX opportunities outside XX our of fiscal Zaragoza openings our including fifth plan U.S., warehouses With relocations, worldwide. these opened the we X building we've XX XXXX net

year, up and and We led the Logistics and items over this big logistics XX% continue Appliances e-commerce prior. year. has over had delivered X.X remarkable last a grow bulky and our to and the has business Furniture million way, year Costco

and item enhance the assortment, scheduling times experience. in our Improvements member delivery functionality, all

with great and be of big the expect will a have this e-commerce We key continued items business year. with bulky our momentum part coming progress and in

members. received been past have front from on app. This checkout installed being Costco the to doors warehouse very inventory realize able was at process. year. about the are check work the up benefits the membership to Turning our We're excited by goal starting technology. of delivered speeding this the the very that card the Members to And well done has scanners via

results back over for should our the improvements I'll questions. discuss More the warehouses. With that, both field on to I'll turn Gary currently which some benefit and online and in during further quarter, are jump it back underway, to business, Q&A our to

Thanks, In of we fiscal fourth reported release, ended XXXX for quarter operating for the results today's September press X. Ron. XX weeks

did on support to today's Events supplemental and investor under deck a our As we Presentations with quarter, slide site published press last we information release.

find it you You helpful have this might front to through walk in our presentation I as results. of

came when $X.XXX $X.XX to of Net nonrecurring $X.XX year's This discussion, a year's diluted for or this per million results in is Throughout year. to XXs $X.XX and billion ]. [ the of fourth tax per true-ups fourth last last we're extra $X.XX year's multiply income from diluted to various quarter, the fourth XX-week and share tax way last up by week billion settlement the XX, normalize in comparing or quarter at a best diluted for reserves. share, related benefit $XX net quarter included transfer results share the per XX-week to pricing

was income net X% Reported up year-over-year.

Canada X.X% comp sales and deflation. gas sales FX. or This X.X% FX. adjusted excluding net up and XX.X% benefit for X.X% X.X% extra And X% an income Excluding X.X% share were $XX.X up last up comparable for week sales quarter normalized gas led billion, year, plus been X.X% this from year's comparable the year. sales of comparable last year-over-year million the in have X.X% would fourth X.X%. adjusted. deflation extra and sales and up weeks. fourth plus company locations for and were up the Net the and comp sales or or respectively. reflect other diluted year, XX.X%, for tax nonrecurring $XX.X were sales deflation retail XX comp were week, Adjusting earnings per following quarter were excluding to or increase last X.X% net comp international gas U.S. of all total The

XX.X% XX.X% FX. or adjusted for e-commerce Finally, were sales comp up

foreign relative shopping metrics, QX X.X% approximately sales while X.X%. impacted in impacted Traffic terms negatively the sales U.S. and In approximately deflation X.X% increased or comp currencies of negatively price gasoline sales dollar to U.S. frequency X.X%, worldwide by the by

FX. headwinds X.X% This the negative been Adjusted positive those the have X.X% U.S. worldwide negative X.X% worldwide for the X.X% in would and items, U.S. ticket and Our or in includes transaction and positive average deflation gas ticket was from

fee reported impacted of less an or membership year-over-year. membership Moving of by income fee income. week FX one fee billion, membership million negatively income down income the on X.X% $X statement $X.XXX We X.X%. to increase

the Excluding income FX, normalized the membership and extra year last up impacts fee week X.X%. was from

ran new terms online which In period QX an of U.S. XX.X%, and Canada a renewal in promotion rates, at from [ was ] related fiscal that slight end, rate year decrease end. renewal sign-ups. resulted XXX,XXX over short X.X% This our to down in we XXXX, for membership QX

XX.X the We renewal in that up cohort, came slight renewal with digital U.S. meaningful QX cardholders, for had ended at which QX in worldwide during the and the renewal same the the entered calculation the X.X% paid typical a there of for fiscal no changes last XX.X%, U.S. improvement million rate is members those household Outside As rate those rate. lower were The negative in as impact members, promotions, sign-ups, U.S. rate. on QX, year negative up 'XX, rates versus renewal X% offsetting the year-over-year. internationally million with XXX.X year overall

the age. growing of now years. under fiscal since XX.X we members few versus sign-ups year represent and paid X.X% of COVID has average sales. XX.X% QX memberships, our of lowered new paid age worldwide At of years executive Executive XX were member over percentage been had XX.X% million of last member This up About end, in the members has XXXX and last half year.

gross to Turning margin.

excluding points basis in quarter year points, XX.X% to by Our and higher XX rate core coming gas was by XX last points, lower year-over-year the reported and at up basis basis [ basis lower ] in gas without deflation. X fourth was points XX XX% by compared deflation.

the by Ancillary businesses world growth, gross by E-commerce basis benefit their and terms from as increase from strong that margin was points core and our sales, fulfillment year, higher basis This core-on-core nothing of excluding result X points. In and volatility weaker in item quarter basis gas was productivity. tailwinds as of moderate higher benefited other gas year-over-year the e-commerce. sales last and from margins And own as but driven margins significant a and gas events benefited XX were XXXX margins a deflation. QX slightly in points, on some higher lapping quarter. XX mix

or basis X% sales basis basis to LIFO reflecting in points. had We executive rewards $X higher a members. penetration credit by compared QX to points X QX higher from And without year. points an gas charge LIFO $XX in deflation, our was last million was X X a million year this benefit

to Moving SG&A.

gas basis higher quarter higher gas deflation. flat adjusted SG&A was points, X SG&A by compared X deflation. basis of was excluding but coming X.XX% was the year-over-year year's SG&A X.XX%. Our to in rate for component basis points last X by was at points, higher operations fourth The reported in

focus Higher which the effect points. for U.S. remains in and part our Canada, continue was of a Investing the a without wages basis employees compensation basis quarter basis went X was on without but the X into last higher strategy, quarter flat will Central was higher and by to key gas the to of the for in headwind points and we our of costs. approximately driving sales weeks points X line and Stock improving year-over-year top incremental deflation. preopening X productivity point mitigate deflation. and X basis was gas flat

will million income lower first second balances year. due $XX paid interest billion Below cash million expense to versus income million $X and exchange. other reflecting $XX foreign primarily year, was to headwind a year and the special in $XX this in year. gain billion versus rates. January year to paydown $X.X Interest was loss last income Interest year-over-year week $XX of versus a ] continue for million [ the the the QX an in was last $XXX quarter XXXX. was $XXX the interest this this due This FX line, million of year, operating last to due debt primarily be of half million dividend lower

tax in taxes, XX.X% income QX was of terms XX.X% QX rate to in year. our last compared In

items. the As this tax rate for benefited mentioned tax been Adjusted rate quarter $XX benefit, earlier, net from of for discrete XX.X%. have million would the year's this

items warehouses the approximately the to and to the was in XX $X.XX QX in Capital billion, fourth the expenditure X China. year note bringing X in in Korea billion. each new of U.S., $X.XX now spend Turning total quarter. opened Japan quarter, We in in some XX key and

sales, the nonfoods with once merchandising deeper comparable again, core a led look highest QX. way the sales into in Taking

have a buyers great and housewares, toys all and gift new digits items the finding furnishings, in and tires jewelry, home Gold quarter. cards, seasonal, double fantastic performed and done at retail. exciting warehouse, that to at XX% XX% values. up Our job including to also category assorted well aids a value with as expanded and fragrances we high-end online new SKUs, beauty have and both and Health in elevated were luxury

continued Whipped syrup to aerosol our on business pounds a where and grow cheese, Tender KS resonating with national lowered of organic as the fresh paneer Golden well XX% our such Punjabi in the are value and some greater in and Kirkland this introduction whole. the value significant Cookies at boneless growth the than focus and departments, We're Cream. Fried Chicken the also Kirkland Tofu member saw such lines, members. XX% faster new brands saw department sold. [ of more a Across sundries, with maple food our Signature by international as continues An adding In we Signature example is food we as compared price high single-digit a meat offers KS extremely our our members. Signature delivering items is pace Kimbap and Kirkland our value resonating ] products lift as to

to include KS Our just goal to Foil And so. few reduced nuts Standard to be KS from KS opportunities to to examples to a first to the Spanish see lower and where from Olive from reduced X-liter $XX.XX. [indiscernible] reduced $X.XX pack $XX.XX $XX.XX we $X.XX. the is quarter X from do always Macadamia $XX.XX. reduced Oil KS this $XX.XX prices $XX.XX

the emissions this sustainability presenting which Our achieving and is lowering lower member, reduce our great a lower of the $XX.XX. to packs, pass to to tub also KS from recently commitment laundry A rigid the converted opportunities by to example these from $XX.XX allowed to pouch. to and by cost on This is $X packaging a we plastic savings XX% costs. our price us plastic

the laundry reduced. with also paper greatly emissions to production countries as the success such these these and found with goods both closer shipment manufacturing localize We've they're sold, By costs which working water, in to items bulky goods of of and associated detergents. suppliers are

quarter, Japan-produced Paper introduced This our we Kirkland new Signature Towels.

the lower the per that benefits us to to Asia, unit shipping addition no millions reduced In by towels to the U.S. of from emissions the or of from $X price longer allowed market. freight in XX% units paper approximately

member are the country increase our up, of locally in of sales pharmacy script ramps SKUs. process the product had of driven Shifting growth annual by this production will counts. transitioning $XX in produce Asian other one the businesses, to ancillary Within strongest result savings As markets we production in million. percentage double-digit

Our have the members optical department taken also well advantage more frames in performed brand exceptional as values and sunglasses. name of

The sales and as merchandise. price result XX-week of all per in flat once quarter a gallon were X% the good effectively Baltimore. was flow On partially some Food with negative offset Red This and has was in the deflation Product single is shipping the was gas products generally delays. by in fresh basis, the and digits average and few quarter is exceptions. a a again chain, Panama seeing pain we remaining gallon supply Sea like-for-like Inflation through core growth In availability good of being non-foods. lower. offset foods slightly and X%. The are sundries point low of across been minor causing relatively were by a inflationary this

Egg have beef a tight. vegetable prime still and of and been SKUs supplies being avian influenza impacted by are negatively handful

are earlier, technology to our with our we momentum in As good with continue digital progress and Ron the pleased shared priorities. business make

downloads million search we bringing downloaded function to a on Our rate app, X.X total doubling the app leading mobile click-through our XX search to U.S. times and quarter, million, the the recently results. on in of was upgraded native approximately

all to another helping drive up rates conversion growth. comparable of average year-over-year, were and sales strong quarter order value traffic, E-commerce

prefer all tailwind While continued meaningful tires, of pickup a double digits also year-over-year. warehouse aids, comps, same-day U.S. was completed the to allows pharmacy strength bullion grew hardware, and buy online beauty in TV gift and cards, rollout delivery. in e-commerce new appliances, home housewares, pickup to was optical health who wait for The a for QX. in for not This toys, market TVs furnishings, of in and members

buy a isn't online more Costco fulfill added shipping those We're similar offset TVs, costs our pickup for high labor cost orders. warehouses required lower-priced high-value effective now in in items, While laptops. with program warehouse Next, than savings freight testing us for items like on the to the on the to week, curated marketplace, XX% small, the and on year-over-year. increase while that added new membership adjusting grow went XX into quarter. September XX sales comment brief still nicely the gross in We to on the nearly continued effect bringing for fee X. total vendors, extra grew A

opportunities continuous The accounting, in said, will this year. minimal in majority our members have Due lower of benefit into to XXXX. will continue for exciting and the about we deferred to capabilities is impact and to execute by greater and are such prices digital early momentum invest that items year as with strategy the our Kirkland and delivering wage year members, call. excited shared XXXX In in XXXX fiscal new the globally. growth are the our half the with evidenced today's being of and closing, year employees our fiscal our come as footprint of increase vast value ahead as fiscal innovating the and and Signature growing exiting July encouraged back warehouse example commitment on by we

concludes Xth September X for after upcoming the prepared now announce open terms on our close. line weeks ending our Sunday, market the We'll Q&A. we releases, of In sales Xth October October the results for will remarks. Wednesday, up That

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

a greater discussion into call, about membership have Costco and well. earnings there of possibility foundational reinvestment was as shortly in as lot fee been investments after the employee future of leverage a announced made wages SG&A previous already increase the the a On

posture are right clearly should success, reconcile putting wage approach thing leverage and While and of business for investments for the same potential adopting driving also into wages. we but back the instrumental the of more how culture prior upside Costco's this

question. the for Thanks

model for overall think company. about we As our the

continue believe going our really Our our to our is overall we've keep And top driving And in members a critical successfully you continuing we invest lowering business. over know, to that value as the at in on what in to across going forward continue balance Costco for members, prices achieving the we focus invest years, strategy is to a that's of and and to sales line make our invest be growth. employees. sure part . done

number employees absolutely then -- we starting in X increase You're in were that in mentioned, our increasing various the the the right, year, our in we a the investments during recently increase you our in employees further as And our during XXXX, in And of quarter. announced we of we we network. And announced in wage. announced think distribution we for roles and shared for fact, a I September March times the across wages warehouses. back hourly year, this made warehouses managerial all an

And that's in of so perspective, our support growth the line an think continuing top from the to important company. we part

you in adjust of good for at deflation SG&A consistently the we we've able quarter, saw looking You cost As particularly when for effectively And -- our and productivity cost do was continue gas expectation were to the driving that. news operational part business, by offset to the leverage. that the those ourselves driving we'll is that of I time. increases that think over done And pretty sales and

like particular how to investments, I more specific we but to and So giving to guidance growth. over line driving sustainably add? model top of those making us, we're to ensure you'd long expect driving driving keep measure our looking be for the about Ron, able leverage in on think also it's a term anything less but profitable

Gary. No, agree with I you, have to

speak you've at different the rolled Got increase be lift a potentially And Should in far? follow-up, in the to the we fee quick or the card bump as out it. the impact really as a growth well? counts stores MFI addition just so of you to helpful. member can That's from modeling readers

Ron. and the we've especially Several different X It day. traffic gives in is readers front using X This the Europe The real-time about in the card in years for counts a over we've for months. our for at benefits operators purpose system the been U.K. here the door, U.S. throughout this of is and piloted now it.

fluctuations front-end we close able we're on the need look forth. a to business. like counts of little monitor because and foods can lines better and adjust So traffic that to know what the We based our lines we fresh so open

And away let it the and at their also renewals of the front they front taken door, verification people's the membership to able We has membership get them if know due friction that to registers status. move the is from look front-end where to we're before end.

realized our it's operators some in healthy front-end much and the improvements to very we've day. the manage nice, throughout productivity, allowed business . better So

with JPMorgan. Your comes Chris next Horvers question from

the -- Any others? about of what can around holidays percentage emerging risk? maybe is you product the the extent have to And do in What that's for bring risk to question exposed port the comes are talk description on categories here. those early the through that more manage defected try versus ports. the that tried the to strike you to product you

port Yes, business, is some as question. impact very been but When strike come I'll in business only Yes. are sundries in There's a closely of in, and take think imported Ron is limited import as of this our subset you to This about less our nonfood. important. not well food -- about goods well. something XX% some some timing the of We we that is nonfoods there domestic about the is nonfoods knew we've that watching and and The total time. primarily for again. that

of what and of is on goods little based be that a the there. in looked cleared bit We've about. country across ports, and know different got can't disruptive contingency with execute and frame done we've the different out impactful, we plans, We've to we at spoke have moving you could tell to time you if ahead get we've could that length in alternate done holiday plans several happen It preshipped. We our everything I coming things could we goods needed. how ports sights. it until But that could this

closely, They're it. preemptive Our this. all buyers are to taken as it for watching as measures could we've and we prepare over many

just a then And as follow-up. quick

risk down because rates all that As freight the you right are into ocean is perhaps about now contract maybe expectation about think come as around we this rates, elevated periods? and freight think of next year renewal your

at you freight big good but predicting we're contract. not from in our I that can comes I'm what under chunk a seeing future, of the tell

a The go happen from quarter. up. increase happen last what by year. for a port from did spot market off could else it at So peaked if see off good we've insulated spot again, go point. up? team in the We could with insulating the has could something Red job now, could solid is disruption And been this our contracts we're coming great Absolutely, that that. or coming the now. Sea, this But that market did seeing us in

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

just the so you you've increase to in across the have are rollout you Ron, back double-digit where Can to And speak And locations scanners. actually Our that to on guys are in shown just far? that reactions sign-ups. U.S.? any new card checks seen a you some positive seeing of membership the go

Yes.

XXX reactions and feedback our out rolled the Russ has been about myself of process, very what's our positive as operators Miller, have the rely through managers Myself, been at our with on head done. and warehouses we members positive. met We both great this the from and well. And really point U.S. have operators, and warehouse reaction and from been all operator,

to that registers, well. that. get when appreciative shocked the are the I not front, sign-ups that. renewal member so because and in about get before a end, the due to lift members We've they're also lift some process up going aware renewals is very that front by to they They know to from as get be seen people and my they're in seen have We now that

we're for a get productivity, interaction. grow, ends to as members as our front good, And looking technology find can volumes to manner. improved we our in smooth help we So everything use know, the improved through

That's gas. the very came up gas build helpful. How on add Can of Gary, color change? and other from much e-comm much the in then the you follow-up, sequential XX line points or the basis a came margins? margin bit And improvement within on my just, business ex how from little

Yes, we results. X those Sure. biggest were the called they X in because out the factor

I relatively pleased nice think similar terms in in e-commerce. of couple that momentum them trend being impact. the of the of as quarters. really E-commerce we've We've actually the a has last been with for seen been

Of course, great point. the sales starting is been growth headline has positive, which very a

improving the team's of done well. better mix And sell-through the inventory of as in the fulfillment, and But job the improved. really product a driving has management efficiency terms then and nice

on mentioned, prepared growth, really growth. remarks, good the we've I really As the across seen around a e-commerce balance board

quarters. pleased with of been we've been has that sustained of last sort the a couple e-commerce trend So a

wouldn't in On the the little anything bit say lighter some was I And a of the quarter earlier, as more case was we I that margin really a tailwind things, there mentioned side unusual It we're cycling same of gas XXXX. really in had was it -- quarter. margin. in the during

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

about I to new on Cheatham for want talk store Brendan Paul. is growth. This

think are then vertical U.S. trying international You on from in would XX step focus you the where U.S. down on levels? mentioned And an why international. side, important increasing I store? being for traffic infill the can Should XXXX, . guess, we nearby on about of you're net from XX growth markets with, share Anything you? versus to a alleviate congestion how new more a those many

it timing some really move a on system. fruition, the mean, On taken the markets, quickly. to years to in new through based X quite have markets may that's get we international larger I where to openings, domestic is building us

way there to all no the going process We those types that buildings plan through queue. the So it's following go that put there. how of in And utilities infrastructure, specific is things. to come we're have. We the then agree along, we

versus the pretty balanced, more thing As far as international it's on timing outlook a growth, of again, than anything. domestic

And years got got get a will few year a U.S. us it we've opened some next that could to XX -- imagine some in think we've building of takes the I countries, more outside up. be you

So forward balanced America We pretty positive U.S., next the look of plenty Canada opening. and being of of cadence several that very in we opportunities infills it in feel growth. for really them ahead. as for us, years But see we for is the North about North we that both continue all to have good, America infills

don't regions And to have good lined the new think say of that next markets. of then at be we'll market that we're but a markets new X we world. expanding I I'd into anything for up year looking new probably X year. next

it. Got

member think to wages. experience about think we through delivering increase. talked that focus the I all How pressure you any the member typically the of Because after that? Is should do fee? period? the near-term fee And I over And we and about you of reinvest Okay. just realize the value fee price. increased longer know X you've follow-up kind that that there flow MFI on MFI in a increase ] you on P&L [ timing the already might as

part things new of Ron employee It's a is believe the better think It Sure. Yes, It we be to but find the for in lowering we increase members that of comments, mentioned launching ways improve wages. pretty experience We that holistically. membership Signature of thanks is always member. ways in And about a these for the prices. also prepared experience earlier. deliver we critical can and our the products. value question. mentioned be can investing some as more in Kirkland our fee, that think about delivering also And the things a we to certainly goal couple member for we too, can

much we we at and holistically make to our more time. delivering do So feel very over how look we it members sure that value we're confident

Signature increases been wage started QX, some those guidance value through and ways part we To heard in don't And in you we've and with maybe the which provide of answer that journey Kirkland more prices the things as that we've mentioned, question products in to new lower you company. already the of deliver of that of generally as able the some quarter. of some for you broader results the updates know, the our

said, us. fiscal the very being 'XX. very new head the we would opportunity good say, ahead our we ending overall, we fiscal about of That into as year, about feel momentum feel And good I year

always, line As to member value so leverage. by top and we've invest And continuing and that the while to profitably. ourselves for how expect set and employees be high in to internal efficiencies grow we do driving we'll expectations doing

few unusual in of the the with the in, part the mentioned. come increase, first see we of opportunities But my gross items on half and the wouldn't We most membership those normally margin find of really generally to that sort will opportunities for second are And half terms a still and to as cadence remarks, prepared will deferred either. many fee for accounting this of fund comment of year you there as ahead investments. year to the that in And XXXX. in SG&A improve XXXX I ways mentioned

higher volatility was specific due And years, namely cycling of factors pretty world from gas stable income, and rates to it's higher some then over while and there events be last certainly year. cash QX, profit, to couple where the interest in last there QX we'll been the a balances really year were also interest

linear cadence say thing probably that of So our would typically think 'XX, likely than think you be our is as would to the I across it's earnings growth I expect. one less you about

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

start -- with core product by on fresh I What I X was Gary, and category nonfood? right, core think color bps. wanted was sundries the said foods, up to of you And

and sort year, were Food again, in the sundries strong perspective the was which Yes. X, but John. the slightly it, and the Fresh the the think, positive nonfood and slightly of negative. was strongest mix of was really, was from sell-through of breakout I that

price some you and cited of decreases that guys. you anyway taken when talked do Kirkland that all And Kirkland second both you about -- you you then were Signature. for gave about you've How you maybe think Signature, of those --

name price now? used is those business -- versus scale because than that, on you're to lot getting a flatter -- about signature to Kirkland you're an product. talk be that more is a decreases just is margin manage to trying Signature? penetration or profitable maybe that Where maybe Kirkland So brand it unchanged becoming And

I guess take that I'll one.

grow. We the grow And now board across in the it's penetration XXs see as it as goes. penetration to continue the continues our to high

a and we're only not if price of Signature. ] in investing But we're investment that in they showing commitment unit driving going her with volume. the and that and [ setting to to team, in our are of We have price going Kirkland that seeing benefits suppliers, expect Claudine start example

suppliers So doing Costco the our and and also are in using seeing done. we great our their support as we're partners are partner around interested also to from that, that get but world. That business driving that

year proposition in next to members Signature. the coming great this value members items to because continue I So we've that our this come we a our continue place with will is get loyalty to got and you Kirkland build Kirkland continues Signature up to enhance that -- some think

So we to to we continue see and improving benefits coming. and We grow, the see the penetration continue to over members time. see the good value the things

Gary, if you would...

our Signature were that Ron, disciplined margin on make margin some a globally to the as Obviously, we're opportunities together cap product. opportunity. just across ways efficiently John, merchandising thinking our really to asking mix that -- and seeing the as prepared about in-country great to of on And the We're in margin Kirkland around creates we in I more finding working it some we examples the team to grow, overall a we add also is also, Yes, overall. more stay couple comments. have you maybe, that mentioned. we expect really mentioned production and But to a tailwind continues very buy definitely comment

win-win member to around the to those we to work term. but value think think I for while in us our and we that the So when the creating can for in you sense that take creates balance member, tailwinds ways investment continuing combined, that's it grow stick the margins within the opportunity commitments long create I more within, do all

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

Ciccarelli. Scot

then highlighted scanning. the feel for comment you some and often ID the just expectations on reductions broader nonmembers question that And on given deflation Another how of inflation Any you price for earlier, secondly, at Costco? were shopping can 'XX? your fiscal

As set cards Gary exclusive that nonmembers. give been in exclusive signing There we're those far But members. people people [ with. couldn't as to really what are I really that the take he'd I I inflation, of in that scanning, percent are things one. we've number. couldn't far a as come company that think number since coming inception of as of -- and And the shop type to ] mean, give like you of you a is for the I

forecast the again, a from flat. sort some key very drove inflation still now. We're Yes, that market very was fresh. and it more give Probably what -- telling at saw That on particularly we're earlier, about. That color the in a inflationary to. but inflation seeing driven what of Ron's be comment talk mainly I in nothing terms little category prices can quarter produce was would by for meaningful happy We perspective, to maybe from know low there the bit but right quiet business. was impact inflation, Scott, to seeing, on essentially of similar of for we overall our you the overall, don't we bit you we good shared I what little the

negative have been really different nothing X% now sort seeing. even and of out range categories, would it's small we're just how coming that well, to inflationary between nothing the Food remarkable between much positive back very But slightly inflationary. actually X% there as but either all slightly a a and

be a mixed deflationary, all is of and a more the which as seeing are corn are We and category bakery causing flower deflationary. view Things whole commodities. on sugar to like

as inflation. we're more cheese, the things seeing on and call, and like on eggs, mentioned cocoa earlier I then butter But and

hold So I our don't of are know that ways today like. looks we're our to to members. seeing is costs the lower anything course, world our down today prices always that's causing find us what to for therefore, And and we believe goal, is that where

susceptible seeing from our to of how course, different quarter happen So we're market. and in But we're dramatically can that that quarter. I for looked anything wouldn't like shocks this changes the say everybody

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

This is [indiscernible] for Michael on Lasser.

And what customer why While in increase? has customer been not? the to response attrition? the see or it's to a rise expect do you Why early, MFI

the question. Yes. for Thanks

the the very familiar increase, fee timing. are with were you about As deliberate we membership

were In COVID increased delayed years every we're from traditionally fee members we because then was higher inflation. initially by and fact, that really X thought of X we've saw our when the with experiencing we and years what

we nonfood until they very see were that . From inflationary we members that our really dissipate categories haven't say, reaction. deliberate started reaction coming we in felt a and I'd member So significant through inflation more were period. were increase to seeing the perspective, we the delaying spending a member in heard

prepared Our membership I as real my rates. of mentioned change There's no trend, some remarks. in renewal in

off for way dog can. we've inflation been we're the pricing on lowering the rotisserie stave able $X.XX. fact we to the demonstrating like at the that that prices members hot I chicken wherever $X.XX generally, think And and at things

of the broadly call, members to sure years we recognition I in trying the that our and think context the increase delivering it we've that of happened principles for them. more cost that the we been to show value value. really what's on deliver earlier our to make stayed whether employees And the want to mentioned to been is X member that in in the wages our as there's true last a be making we investments, over lowering help

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

about guys And are the behavior of your in consumer changes So of note health just on during the consumer front, consumer? any just the then feeling curious how quarter? you

Sure. Thanks, Rupesh.

I think very it's a seeing And through lens. course how consumer shop. through That's coming that been our quality is more that would value have our what insights or and see that say has I and something members our clear through the important. we're in we member never very clearly

has us for our as you at that members is seen I items, have the as dissipated, encouraging trends which our mind. you in as know, in encouraging inflation the our think spend really is, started nonfood thing year-to-date, we on more to have look

be within pleased and what factor, that that I time. definitely, that that a different the in going installation really they've the would of some product, always is the for think, offering categories And for what the that's would electronics, we're appliances promotional widespread members old us, members, non-foods. I necessary across the we're are course, and there categories to looking to if on be of say of but on become we've seen nature we more removal about price, include delivery. we're more over like also the And That deals. in our of

and So as on differentiate as everyday we great try kind of trend overall to well low experience the value. there being a

I in think key the trends kind nonfoods. they're of

spend would of relatively Under home. at seen new the bit in sundry suggest in side But alcohol that food signals home mentioned some from Signature shifting that food the particularly are would and food consumers a and and little in Kirkland still remarks, as in things, our my definitely the food seeing also prepared to introducing. of On business, the members ethnic maybe be really our general food we've soft. away of in side we're been I we've categories that products, growth ones strong from

And we've beef would on the growth some like and fresh I pork. of ground across strong really and a those then side meat, produce lower-cost things, of in of bakery. poultry, continued seen protein acceleration cheaper cuts certainly like items beef say

But and with consumer with choiceful very offering So members. quality signs dollars. is is the resonating definitely how in we're our spending the definitely that they're some value thankfully, that being there's their

Great. And question. follow-up then X media. including alternative Big focus out maybe just streams, on revenue there

a Costco. push maybe latest the And growing from aggressive is is that in more -- there on curious more efforts the Just on there area?

Yes.

technology think targeting level definitely are and member It's to a It's about them a give that us. us of we significant getting opportunity. allow of the capabilities for still the as it foundations journey the in in and that to feel position really creates. to where can infrastructure of offers we a see our journey will the that that good personalized we capabilities terms deliver the I

those capture as it opportunities. over are there the build would fruit new starting significant identify to opportunity to started already see we how drive revenue. plans We've can to a out term, and low-hanging we long But where

differently it that will of approach growth that a little That We drive business delivery said, is really those a of those be will growth. company. and also competitive than it the others always every majority to because think CPG advantage many case, them some dollar will help bit they're we'll probably I with partners the with a intended our spending profitable, way less typically top this line do on e-commerce reinvesting And -- show do we for to as being this overall we offset vast think be will as drive is to in dollars fulfillment well. costs

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

to Just e-commerce, ask about wanted strength there. continued obviously,

in margins Instacart, how penetration? included this and that a us And impacting give the an what Just you broad the the update growth on would others like can is on if level? you profitability be just penetration penetration, update at that just do

Kelly. Thanks, Yes.

growth the we're rate momentum we pleased that for really were digital. XX-year period. at annual been Actually, XX% over over look compounded in progress, data As we've looking it's seen recently XX-year grown that a we e-commerce, period, we've with in the at the and our

growth it's ways clearly members for them evaluating and deals story been So giving the the opportunities in value new for we're which a additional find us significant member. to and

today. Overall, be single-digit e-commerce be range will we penetration it high would sort the based on report the how of -- in

[ If those could way. we of if I some started your earlier, include you say that kind sales of ] transactions, it to don't -- point digitally

sundries. might So ways be members groceries in the which food and Instacart, buying and Uber,

you those added all in our those include the elements in, the gas If in we and number. include when course, also of be we'd into double-digit sales, penetration you total

that's comments any is profitability And Okay. and impacting profitability? on how how e-commerce --

say still obviously intuitively in the marginally, member. for and doing more shopping that's would shopping it's sense the we're picking and given traditional warehouse, makes the the I Yes. that it's lower of than

improvements seen some numbers, As I some remarks have that's leverage our mentioned that in good we created sales the the as in model. prepared we've grown

costs. fulfillment the improving efficiency We're of our

an the well. is drive but the some it efficiency leverage improving to as improvements the trend creating, business over of that's of growth the making in more time on team also continuing the because So and are sales

Your Davidson. comes next of D.A. Michael with the question . from line Baker

I'll One, a you about can your pricing, about then gaps? of have investing in how been in price, a talk And seeing questions. cetera. price competitive you lot . Two talk grocery are particularly some follow-up chains grocery. There's et after What that.

Yes, for thanks the question.

key competitor. for we're think the our is us I biggest own thing

investments heard how lower staying competition. meetings, not last watching we you we're mention raise close can to always of us of that we're As But we earlier, we're to find of our ways reacting. price to want and to do the course, the proactive, and one prices very And our are majority regular every to first about budget prices. that. be at the talking And

food normal the wouldn't that as to seen environment and on partners competition That activity of that has we would as we're us, appliances took CPG of in sort of earlier, and area increasing. think with across certainly consumer our be balance, electronics well. units, mentioned been we've drive would where I I that find the of if say the that you space. the an are say I it But investing more earlier, all outside Ron some activity. the that seeing promotional ways would case be be mentioned to would

members. proactive And best to value provide quality, the good in market the about to be best and position to we for our continue feel finding ways very our relative

guys Excellent. Follow-up that say think I this in a think over? something, the broadly look at any at gas prices fall, Is I something at speaking, to or the data. prices people when growth gas XX% gallons That XX% year-over-year, unit guys into that your I did -- little bit -- come you get gas the buy decelerate are least all? Does that growth the hurt makes now sense. quarter. concern XX%, club Because traffic will have down of latest come and you think

I Ron. a the which Gallons is bit see as concern. softer was quarter. a X%, don't Yes. were little up than prior This it

have peaks So attraction a But do positive. that see transactions, prices, hit you of very stations. we in looks dual when we those balance will Costco greater our the to transactions gas

dropping so growth based we're in off seeing gas And the slightly that out we're at stations. all not in on gallon the traffic seeing warehouse softer the

question next Melius with comes Karen from . Short of your line the Research.

again. to you talk to Good

don't been that shape at form. pretax is, question way, margin, my up. has to creeping you obviously when manage But or you I it So look any your in know

valuation, in the So a XX immaterial margin, it's delta not you earnings that point on when basis at and/or look to increase to actual obviously. get

you that. wondering about how So think

top that way that the Karen, goal about I earlier the to and and to the sure for of priority for employer it and in delivering always line. That's choice. as is referring value to focused we company, delivering were really make of we're the comments member think back is the on employees we think to investing drive is top that we're some an improved well investments our our

our because member. because ways comment to our I doing for gross lower margin us the successful years we and our for business that costs been I value in there in of think the I the appreciate drive are have part continue over to think more

future. as been Retail growth will and on, buying things there opportunities growth, like we Media in And the for seen, focused Some things be e-commerce mentioned of Signature the global Kirkland we've that that we've earlier. the like

there be to number So SG&A investment. can also are ways in that of we a number drive more continue ways margin gross efficient where a in of I and think to

us a that and it margin well. slightly for really that targeted that as the about mentioned, over grow outcome the suggest to then line I as is it's history, to expand as I we're focus drive, with, to wouldn't continue would pleased But a you've driving well growth that, top margins, sure always for Our that making done you good It's opportunities, to and we investors. outcome. line to as it's continue allows us when say, something we're as that's top and has allowed look mentioned, obviously, that we've mentioned, our if the time,

with while would margin I are agree Gary. to with often that improve to I buyers And speak buyers several levers that efficiencies bringing comes our that margins. in we're buying, margin. in prices And market bit the the we about better the our lower operators well. realizing that that that with items to could as that very our there we're and we're good newness comes that new improving sell-throughs little goods add seeing, fact that, and can have a have the

year And improving. shrinkage this business as year results a saw in improving some and our And well. solid the on margin picked been operating shrink has we up nice

those to So levers that and margins. some augment are continue prices will lowering improve different

it from is is there that think But to X%-ish up fair maybe going realistic?

zero-sum that game. Ron think it into a into of I I get don't as see it, Kare, think, future. we're the sort know, Yes, we of guidance if you in as expecting like, wouldn't what do as a you shared, we

provide time, opportunity do an do that. we can ways invest the over believe that to through continue find there's we believe want profitability to to our guidance continue any think to members and business to but and you we really I wouldn't related to the that way I our to in specific . improve manage employees,

Laura from Champine Loop Capital.

question Melich with next Greg Evercore comes ISI. Your from

What gasoline, normalized to sort want now as that forward? $X.XX of of to a gallon? back Or of I going are we -- and profitability back tailwind. particularly penny profit should at per think we range the gross the go margin, what

Yes.

a in sharing and I specific that gas, because Greg, showed generally, improvement would areas obviously of to of businesses, across think, gas as on be earlier, number particularly that quarter, trajectory profitability, of But of wanting sort it stable. business. overall I like breakdown more we aren't as mentioned true detailed generally to gas color the I call out was would in other relatively I be being of in of side in while the are peaks and to that short troughs gas the I any because we're as the wouldn't for business would part it term of this expecting the of anything up share There think market of be -- of stable fairly the volatility cause think sort in wouldn't sometimes. of us being or us. as general the changing

But think because example that as I mentioned, there of quarter, say, next was of where was gas -- an some unusual really I think volatility quarter in model. of not to world Obviously, sort As trajectory differently this major being at or pops as a underlying events. provide up, something something of I the unusual wouldn't should where main, very a of our would but change. in that color in we there's directional that look change being do I

the or something Got maybe the set think average wage And the $XX you level wages are now number globally? I your like could past, recent given it. increase, on help hour? in the U.S. so us, what was an in

$XX the hour. just Currently, is north No. wage an average of

Just north for ? XX%. that's U.S. Great. of And the

Canada. Canada and . [indiscernible] U.S. Yes. in

So my there. was the last the question just success given nonfood,

to Boeing into curious, are plans gold market? bring maybe any out bullion bullion called Kirkland gold there the Signature You I'm just the again.

at plans this No time.

for And Gary I over . closing comments. time questions conference turn ladies the will the and gentlemen, for have today. to back now that's all we

Krista. the call look for Thank you, talking you That you earnings will next the conclude call. Thank you. forward joining quarterly we at Thank to our all to today, call. and

you participation, gentlemen, disconnect. does now this may call. conference and Thank and conclude your Ladies you today's for