COST - Earnings call transcript Q4 2021 | Costco Wholesale Corporation

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Operator

Good day and thank you for standing by. Welcome to the Fourth Quarter earnings call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. during on you your question press need a X star telephone. ask that will time, to To

If you conference require Galanti, X. first I any for CFO. further assistance, now speaker go to please Thank like you. hand ahead. Mr. the today, over Please your would to Richard press star

Richard Galanti

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

only a or included -related $X.XX XXth. today's $X.XX date charge pre-tax per year's update fourth billion share. million Last share. these diluted of speak operating per million This for of a weeks share or shares, in fiscal costs. came to as by required of an certain $XXX pre-tax XXXX, year's quarter Forward-looking the the billion $XX write-off $X.XX except $X.XX fourth or quarter quarter release, assets. at income X.XXX Last year's income charge August fourth-quarter undertake the quarter made, In we COVID the or in at law. IT they fourth and Company included for ended results net reported XX not statements, Reported statements of as net press the does for the XX are came

Net of the in as million quarter. for the FX -- ex-gas reversal weeks increased product ago, share a $X.XX billion U.S. $XX from $XX positive. inflation share an to to benefit and a the and in hour assessment offset FX XX.X% partial Other sales X.X%. benefit to inflation prepayment inflation Comparable XX.X%, inflation related sales X.X%. fourth and without on the XX.X% XX.X% FX Total FX. quarter billion debt included fourth the FX, ex-gas pre-tax for E-commerce, $X.XX per of XX%, per would way, and the reserve an XX.X excluding reported by a million reported of related XX As the up well, Company ex-gas a tax or was XXXX. quarter $X.X for share reported $XX.XX charge billion, a earlier year taken the partially Canada X.X%. year fiscal gas was or reported basis, it XX.X% be the by XX.X% gas for reported plus, reported X.X% positive, and international a inflation, $XX.XX

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

from Our the those X.X% gas including the in inflation quarter, or fourth was average worldwide impact X.X% basket FX. that -- and during positive the transaction numbers, and up U.S.

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

the increase. to effectively $XXX prop positive income fee -- an X.XXX positive FX excess $XXX of quarter of fourth a the million fourth represents benefit been billion year-over-year, That's positive income down a million to fourth line, membership income a increase quarter number the the would've or million at $XXX million X.X% in -- excluding to effective positive a year's to from fee membership $XXX $X.XXX prior statement from Moving membership came the the for billion quarter XXXX. in up XX.X%

up up XX.X% our rate came of U.S. the weeks renewal worldwide rate at X/XX of in, from earlier came In benefiting, well of average, increased number in point members also rates percentage end, XX.X%, believe, The X/XX weeks members QX at quarter fourth in members. XX are we than renew rates rate a Canada, executive percentage as as end. higher auto-renewing, more renewal penetration for a at of point and who, non-executive terms was and XX rate earlier. Renewal from renewal on a QX

also time. have during rates renewal this first-year well Our improved as

weeks million and million well. came the of were million. paid households XXX.X member paid at earlier. shared weeks executive end. cardholders, households with we or X.X year-end of came you a figure an terms $XX.X At million, In over executive QX from million members total end QX up members. a a XX.X new of at -- XX.X during as as cardholders had Total X.X were in of end members XXX.X we at higher million That's XX few period, in the QX that's increase little the fiscal than XX-week And QX ago, at the million number total

down our year-over-year gross the Moving gross and lower higher excluding deflation, XX points, fourth gas was was it X the to by quarter line, margin points. actually reported in basis margin by basis

core be to would businesses, would I you two numbers, merchandise, matrix columns you margin I little other a do, item jot ancillary be line The items third ancillary -- usually if line of and item item fourth be reported down will will. gross columns, second Two being would line the lifo, the As ask line second first and and and would fourth be last the line be reward, X% total. year-over-year in inflation. the item gas line one last be column, then excluding item quarter, would other, finally,

point year-over-year ex-gas inflation. other inflation. ex-gas XX and plus plus a on basis XX. and basis year-over-year and plus plus reported X and Lifo XX and Ancillary So, XX on a points, minus basis a basis, points. lower basis was minus other core ex-gas XX inflation points, X% X basis -- businesses reward by XX report was on lower minus on merchandise X plus X minus and reported

the columns, ex-gas for just I again, If the and as points the XX you X add points. basis up plus you X basis reported, inflation mentioned, total get

last by year year-over-year from ex-gas inflation. Now versus XX to shift begin a here Similar are merchandise we as primarily core core ancillary shifting year we sales to lower by the the saw function out you of and to quarters more of sales quarter. significant last sales component back ancillary revert other Recall a lower is of historical see to and XX into last penetrations. the businesses the and

up, sales, and core the core were In of lower in core slightly margins on by were quarter. were fourth the quarter, basis lower slightly the year-over-year. and their and sundries driver core down XX and terms the own are of fundamental non-foods the foods the points food Fresh with being core lower margin in

the from have sales Now in a retained remained productivity exceptional gains foods are ago some product from that productivity of year lapping high. fresh QX. as productivity spoilage that and We low those gains volumes labor outside occurred --

and pandemic. to higher a business Gasoline the in last elected this you've was quarter. some the few in we've of softer we and margin, gross seen and/or good points months. increases price Ancillary lapping matrix also as However, the delay in environment over a other the XX chart to hold, mitigate as quarter inflation year-over-year, by the XX increasingly ex-gas the had inflationary due higher are -- quarter, by basis

of those year, of improvement were which We on also compares versus also the last impacts to showed travel, benefited a by optical, COVID due in all food easy businesses. court,

the had the this without LIFO LIFO, charge penetration for a seen a the member implying LIFO higher that basis of gas ex-gas but on with minutes. X% million the result which is X associated years, more to costs basis charge of such primarily $XX a then related We Now gross I by importantly, This inflation. in XXXX. matrix by reported COVID-related slightly lower with the pressures, haven't it. rewards and quarter, reward, in charge lower inflationary more basis will And XX a sales by the discuss going points continued year ex-gas ago. inflation. This up is since cost Again, is to about a point XX in a from we other points and inflation. first X is up and become basis few basis, margin this executive X X would both higher was points,

reported inflation. SG&A better the or year-over-year in XX quarter lower fourth excluding lower points points, our or basis was SG&A gas and basis by to better Moving by XX

up reported day, the points of items basis, central, plus then on matrix an and and ex-gas operations lower plus plus better lower the five-line compensation, X. reported and core points. Central higher plus XX by XX basis X items fourth basis basis two by or or plus total, second columns plus again, XX. other, points in and XX better inflation gas was Adding minus a second by X or operations, basis the on compensation, points plus SG&A line item X. XX other The inflation was by And and inflation ex-gas a basis reported third-line-item X columns, Stock lower line ex XX. and -- stock

and impact you wage by the hour XX-basis again excluding with year-over-year was and of point Central increase. wage also X -- better inflation. -- permanent matrix, hour and $X in higher component includes XX from core by by inflation again, include of by it basis by in X Keep operations low points. point higher an March basis expense gas sales in basis by and year. the or As these see X this by bate implemented strong we higher can that increase point X compensation the dollar then XX stock This the -- lower and mind the the helped results ex-gas -- cost improved by result, an

XX gas other That was or the of $XX $XXX points points, year XX, plus expense or and of the points. million plus lower. of Now was of reversal of included product IT COVID totaling of This million assets, inflation, assessment or so or XX the basis includes basis points. XX write-off basis the basis in the $XX number million a reserve without the tax year XX last other

where all you get you up, those the XX. So, add that's

this Interest $XX and up at million. compared higher is the so told billion All a on in year-over-year, income million favorable both quarter interest operating of were quarter. the of and billion to prepayment. fourth-quarter others the that following $X.XXX came XX% the ago. Overall the increased And earlier. year half same XX XX part million line, timing Pre-opening FX, on coming was to X.XXX within Last this expense fourth operating is pre-tax XX% is a half year compared income year quarter make-whole due openings. by in billion, last in and of in Roughly million, a in other X. income for year's $X.XXX by fourth was the up related XXXX, X.XXX Next this location, quarter the as year the debt at $XX by to last is to of different reported for statement million year-over-year. the the pre-opening the higher year, pre-opening. Below in quarter essentially reported to earnings coming year's amounts billion. Pre-opening given charge due income $XX given year,

tax fourth-quarter rate quarter rate our higher of XX.X. was year's fourth the last in Now, than XX.X%,

open items course Fiscal to to of A changes tax which warehouse XX total actually our year, net somewhere second including normalized net always opened in the U.S. to wait course units, had we units. 'XX, to the in first of XX, which New for For Unless other of and XX% China including This similar opening Zealand. warehouses we're are XX rate 'XX our we'll new see. relocations, we ended, there Fiscal of two of based at rates, be and have Fiscal and openings effective a that net we Company France, location XX% increase few a note, and to to estimates, change, total corporate anticipate XX on range. current but expansion each least looking the tax of our 'XX, in can just

XXXX R we well, regarding X.XX quarter expenditures, was plan locations. capital spend our expenditure approximately fourth five capital billion. to As relocate

spend full-year billion. was capital X.XX Our

this call, on facility West distribution million included a big -- As bulky relatively a purchase recent activities. I $XXX distribution and delivery filler mentioned to support a quarter's in last of our Coast the

to Update strong, and Logistics drive Stronger and of was - in ex big top E-commerce, X.X% the couple very on $XXX,XXX a of quarter, Sporting was large COVID. sales Goods like Jewelry, of Home that's actually year-over-year, had Logistics. XX%. E-commerce last continues departments, was QX Costco Pharmacy increase really increased couple year's strong. fourth on a in sold sales. For E-commerce sales, we other while good Majors the by sales Electronics, the Furnishings outsized during A we and strong, range. rings year in fourth of departments quarter, Fx sales ago, bulky

that sales delivery U.S. the quarter compares That were For Costco to within XX% of sales in XX% e-commerce all And to on daily occurring parties to year. our that relates approximately quarter, represented to things Logistics our thousand -- are and up Approximately the logistics last deliveries continuing our department. XXX%. own other -- moving of internal Costco logistics much to grow. site. of the you, Mind XX third XX% to via from seven compares E-commerce currently sales

want purchases next landing -- and mobile expanded for to end, middle XX with Costco for month. From and our and improving a e-com cases. feel, well. major shortages, improved inflation soon. and a pressuring site, brands longer requesting lead disruptions, it's credit rather rollout next trucks cases, supply chain to chain look and card on truck full factors warehouse in and the with receipts to using difficulty also million back chains port container in supply COVID improved online, on More several by times. and coming go chain of and pilot terms -- And Digital and new ability continually on over perspective downloads. additional ingredients; materials, -- In delays, various are the packaging domestic trucker dot-com From I with in on route have by been perspective, inflation. from It's The a detail driver side, pressures, on an we two enhanced some the cost information the app, a shortages times October view have use online in anecdotally full as some things services. various -- driver information. and month. lead of warehouse locations we finding drivers in payment both shortages In features page, raw short an labor even notice, ingredients Domestically, extended components, supply include supply

done this. think ways, can uptick that items crucial, we're is months. these sorry. Despite tissues, into buyers to within the selling signature people as The have as Christmas, out generally, shortages will items planning roll And over adults-related a putting So mentioned great XXXX. with earlier. same limitations cleaning-related many on feeling by as Furniture water, which we're likely of impacting video skews impacted some Also, is key several like earlier. high-demand and towels, feel in two in ordering related the Again, delays I appliances. more -- most in in go in to okay the rollout bath last the job Chip extend demand. early. that's sales to once In bringing weeks. examples times major we and advantage. from think across I tablets, wins some up as XX traditional an weeks ordered to we've last -- items, XX merchandise X received from much XX computers, on We're items call, thing some we this weeks it's with to we're we're results, recent and of doing as shortage items, getting The and some most toys evidenced games, I issues the the

these XX and between to year we've members. timing the these mitigate the it containers freight and In on trucks, increases work containers down to we year. containers the different terms hold U.S. use transport a to and reading a issues, our several we'll of ways the about leased during XXX ship for and We've and Despite cost all drivers in the increasing costs. carry thousand for are price of next to of passed they're costs, day. transportation the higher approximately and impacting and next variety of mitigate ships. time every course ocean Containers, Asia can chartered X and/or also increases were Every continue onto Canada, vessels at X,XXX deliveries deliveries all make

are it. -- a and been again, have there seeing inflationary to that been -- of have Moving more and inflation, variety we and others there pressures many of are

As cost, and with I last demand, abound, shortages inflationary right port at of discussed delays, transportation categories. container higher increased from freight costs, chips computer along Various quarter's commodities everything higher factors chemicals, and demand in higher to certain call, a labor higher shortages fun product now. on prices. of That's oils lot

Some inflationary items oceans. if on across the you soundbites, will, price increases shipped

pulp decent sodas mentioned as it. at on we've Ziplock X% increases to products, combination -- single bags, all meat and of think X-X paying increases apparel to so again and single-digits, they according XX% Price coffee, up are for but Again, to and trash import we're on commodities well other high dressed to where inflation cheeses, those a remain paper due like mid and include pet fresh up to in I shipping. transportation and the of earlier, range. in generally, suppliers oil, costs. done X% the leading we cans and labor, from increases aluminum XX% for goods, Higher up FX. beverages. items. products mitigating items prices with the things things times some the plastic -- to way foods the is feed, on. low and And high certain our -- X-year freight double-digits highs, on Europe, buyers but job like resin to we foil, trying Some can nuts, not some skews, of cups, up to plastic plates, that's items mitigate resin wrap, Plastics, X% crossed containers of increases Metals, pet many oriented mid-single-digit X%. as

between level that the I Earnings price running inflation back I our that side. our X.X% somewhere stated the to X.X%. ago at in the overall I weeks was best estimate guess -- our was Second be and sale was we to XX Call felt and asked Call opted what we X% at Quarter March May weeks time XX earlier at Now, range. updated for on on X.X% Quarter Third the XX in

our in X.X% senior with be overall talking X.X% the of merchants, As estimate we're in today, to products would we range. of the to selling the inflation price

enable good that inflation of this have took that all But and with pivot earlier, of order get where the Traffic prices incredible I to keeping driver operators keep discussed that department as and the -- very and LIFO I in while value as doing our $XX job been I -- we As products to charge the members and in low competitors. our quarter. feel the all the feel can said, for necessary, we warehouses continuing our million our versus this show need, our merchants, when our full to we was

this I we've our our strong think reported in reflected sales despite and aggressive and is profits typical that pricing. challenges achieved,

upcoming we October Thank our for open of with Sunday, Xth, will weeks that, Anne? I you. announce it after on sales with September, market the questions terms will Finally, the results And close. X in ending up Anne. releases, Xrd, September October for Wednesday,

Operator

you. Thank Instructions]. [Operator

first question from the from Stanley. our line have We of Simeon Gutman Morgan

Your now line open. is

Simeon Gutman

the should EBITDA 'XX to you in should was ask grow? of don't next think think if year? give I that, how not I in to you if My don't EBITDA, we comps know a year. or terms And grow lot answer if Richard. guidance, but Hey, about question Fiscal grows or wanted fiscal first it about next whether going is you ask

Richard Galanti

we've Well guidance, things. of first of we that helps a but being I a can't lot and course, Company question, top-line don't on say talked the about always provide

anniversary and to increases depending So, We dollar which of the we'll March, of do level started sales, in next February. have have what on wait will see.

certainly with we've pretty But we end as year. that line there the account, that with we again, as the even QX, bottom and we've line into aggressive crossed. at So, well, being view next taking improve holding as the pricing fingers much so sales, strong as on can of what we shown and can that shown

Simeon Gutman

parts two one wage increase. may sales follow-up on and you the be my then them of mentioned and So, is

wages? anything know but timing angle, it top Amazon is the increases, availability curious side, about, extreme in on at of a on you value can but moved there looking one do mentioned so than in looking I think lap expect you how do differently? big inventory another March, I and the What you have I'm sales seen recovered. And wage is Walmart and know or line you're that up, the is given hasn't increase lap? or those mailers, the and how of should So, then better, of approaching you've we that you'll ancillary terms

Richard Galanti

things and grills, again, you also your even we good hands being of for able can, making we're the COVID bringing house, home, it done a made barbecue we're for I the even new very overall and we turning all, with to -- relates to and and of mitigate it inflation, we ability And have in heck at Sure. And pretty keep will. early having job items of creative the a the bring have food the or think if supply and two financial and order Today all side. delay Well, plus is sundries of that that the space that to particularly think a things because some and we're additional anecdotal to in things, from are about on can advantages anything was that certainly all a this ago, that trim fact of coming the acquisition of in - feel pre year issue with we've first to we're those suppliers Costco chain as items. sure doing summer phases up have stuff, and you we may comments, whatever innovative, have off-season items. to Logistics I electronics. new most that storage on. fast, toys, where items we because our think Christmas, But certainly pivot, it's adding not an stuff. in and I some get job bringing early Not I occurred. We're it's We

standpoint, and this people say, The that. that to So, from looking sometimes doing good job I end? traffic I at with to need other, each think think the a we're going is, the never is despite merchants fact boy, very when

several standpoint, they they're on a an good basis, locations of to full, those others and of you from So, of from the you random sometimes. pictures see inventory look do our for compared who go some visit we

been And so, that I freight hold standpoint, costs, good on. have for issue. feel all it, inflationary that extreme on value. but next have and better those can there a to some we do like things be some more about inflation, We're and extent that competitors in year, on the to our of hold line we successful pragmatic be sales from have of better that being that have, little items, permanent the can't since our strong, a are passed the With those, we or has things a some job, even recognize somewhat been hopefully, even so and it permanent do the passed to and we than job of is on

things, so our despite have bit. at a challenges all the I So, least think, far, worked favor little in those

Simeon Gutman

Richard. Thanks, Okay.

Operator

your Our next of is line Lasser from Michael the comes open. now line question from UBS,

Michael Lasser

the draft Costco's question, retail as overall retail moved profitability past, its Good that have Thanks is margins In higher. Do higher. lot profitability sector. my you of Also, profitability nicely In overall to profitability, of tends a sector the Richard. the taking moved nicely the last year-and-a-half, sustainable? has evening. Costco's you this view for said the off the

Richard Galanti

all and Simeon our we employee’s of big wage lowest, our in north packages the of healthy very wage plan. you, let first that and being me one benefit one Well, and big had XX And raised let and that. other packages of known even just our a best retail. boxes, on wages, and of our to of all, me retail forms out and for package mind in the question always big Look, hourly average care wage respond is we're benefits starting of late, with slightly there take XX, XX.XX U.S. to if finish,

of takes We -- when to to in And or continue going will Michael, your I'm irrespective on do back where sales the it where, employees. pretty on that question? as we what's can by right feel model. we terms our strong knows I what's you with but do are. but our sales, about sorry, and of that Who of Company call many weak to we good know, will whatever go And

Michael Lasser

Yeah. The margin as on? in retail was, profit tends improvement that question the view your to we've profitability from margins improvement influence seen you to profit an Do or and Costco. profitability of this across here sustainable

Richard Galanti

to -- been X, Okay. Well look, X% been we're the the good were of that stick, the extent we've pre-COVID we've comps. over, can lot share To the now greater comps X% when of enjoying right call I'll retailers last we X, or I think and it think low-to-mid market boxes anomaly we what the we've it over to X, two the big range, year-and-a-half some mid-teens we've enjoying a in We enjoying has big two to from and range industry effectively that generate and hope or and will others. accomplished. teens stick, and will taken done average pretty what we about than now that of that feel

in top-line and beginning should at everything continue be teens, they there, I in mid-to-high end -- to could to low-to-mid that they singles don't have could think the still be improve. guess the we the else of the we But of from been a itself. that will Company back comment are internally time, reinforced get to I care has the take of I

Michael Lasser

lot really but with other ancillary of with you're specifically, lot moving back Costco margin. margin gross price second gains there your of on sales hand, the now, core-on-core Got as pieces a moving There's questions really businesses it. last well. that's My a pieces, are happening your everything But strong year. doing on experienced some of the are giving you gross that some right

tends is which the time at of in So, as to a that raise with the that happen? that different What its would sustainable? inflation making the ancillary, to not as be pressure pressure up. on up Costco And the fresh you're is landscape, that, perception where for than margins dynamic part strong this prices that rate retail heating is others make you. Thank slower tends to is

Richard Galanti

I tale parts. tells think many part part your of moving are there your question, so I is the first of -- think

business market. look an in And feel still you of XX%+ gasoline the which but If margin. gives even range on large margin. gasoline, more, a retailers have looking that our a show of sales. of sometimes of retail the savings. more variations competition to but gasoline, always what's Knock-on-wood, that at profitable huge It ability of profitable, can bigger be to a is gross other We it's gross which little quite still huge going quite with It's reflective us is that's make are

last businesses you and of new Optical supply Cavender's people So, where thinking have are that chain our was to warehouses Aid not were into in full period, the and merchandise. our have to anomalies. it negative able kind from there the our COVID, that exciting coming that went lots closed. we merchandise-wise that and of that Again, outright was Travel pivoted the refunding of due takes. [Indiscernible] maintain and benefited there's are XX-week essential unfortunate sense called that thing because having like to booked and issues, Hearing at get COVID, of literally previously extent it some notwithstanding we back in sense Centers to puts roughly business Certainly, were I a comfortable year, we feel places maintain felt the had business have a the revenue so

help So, I are that things those think the us.

Michael Lasser

very Thank Richard. much, you

Operator

you. Thank

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

Your is open. line now

Charles Grom

thanks. that to we would quarters, range that used of to here? ago in up Richard, the sometimes X.X% every per weaker could expect over inflation -- adjust or LIFO credit, XX to couple be handle charge if next charge that about stays just how from have or the per Hey, quarter X.X% we you quarter that years it you million wondering

Richard Galanti

increases years previous going eating for or next I a those say could've to already, to credit enjoyed customers. X inflation than -- we more some there continue when in X, that X our if and less our effectively might And consistent number inflation think been hard any, or there to some will the you're It of that I X, you quarters, done. what if it's view, -- even of wouldn't price very some, And much is there's we price that, mind going LIFO but it in with ways, say the no based inflation level, LIFO offset again, also raise increases. have charge, -- really But on consistent be a X LIFO say. It's Yeah. we've this see stay years And know did just I [Indiscernible]. at depends. was and stayed will ago. some this don't you, but by little, if it into level that. forward at and if

Charles Grom

Okay.

XX in And states Okay. Great, applications then and thanks. job benefits the follow-up, Xst. on guys an recently. companies of to I'm observed that have number if applications There's roughly then spoken on front, labor in a a in a September increase on increase a unemployment have big ended curious you just --

Richard Galanti

the I to that. know asked sense. the haven't know don't and I don't -- I It makes answer

Charles Grom

All Good Thanks. Okay. luck. right.

Richard Galanti

Thanks.

Operator

from of comes Karen Short The the from question line next Barclays.

is line open. Your now

Karen Short

was Hi, much. for LIFO something thanks to charge, of run itself? that a to thing terms year, last of of in XX quarter the the catch-up million rate. speaks to Because clarify questioning, one or this that whole just on that, I line the want was reflective was that the get very

Richard Galanti

the and it is now take silos cost at was and quarter, what end if inventory what It's it's QX end. at it -- your you basically QX of

Karen Short

Okay.

pressure fee So, do obviously all the all from guess the about inflationary guess think on does membership question pricing, you process? business, There you I how these on it likely, bigger my you guess pressures or consumer increase but I less also likely, standpoint, how points make picture is, impact more on fee these your membership decision structure different as I lifted general? in are your the

Richard Galanti

increase softened ish with weakened could we've time gross a our at somebody the coming a But up have remember more a and drive business. We And ago comps pending we had a of and do still and we were fee, will likely we bit, look a over we you you response " weaken because together do. anniversary the bit with but fifth "Hey, Would we a years it drive that more margin I - weakened economy your combination when on the was that, that's said aggressive economy's little pricing. bit. way What gross that our the be profit of prices if weaker that really as membership a the membership lower we said, little do more at positive don't what fee. the asked given is and in years at somebody still it did you number, do a had plus certainly, look could sales on we and little it it? something

still the and -- And have do the increase. loyalty and rates last obviously, certainly, the so, been or from anniversarying at the If last plus year so, we look a up. renewal of Xth really loyalty we're we [Indiscernible] Xth year the anniversarying way away

from So, little way we're about it. a thinking

Karen Short

forward just And view their relative should -- that balance new we be then their some going a a today had had actual that names actually large-cap to cash what conference indicated Okay. pre-pandemic increased. on with

hefty talk cash sitting wondering your perspective sustainable could think you rate pretty excess So, the balance be are could just now. rate if obviously, a still on you what because you of about the balance on cash

Richard Galanti

conservative have I more more the to sheet. balance been always think -- and cash have we've if a considered

the more. about we've more. I as thought world going should think be saying going it think I that don't up up is that think they it

-- saw once need did X shareholders 'XX then back when the we raise if April related probably we fact, we it. our -- COVID, worst-case what capital it months a didn't and that little. specifically of the and was in to gave of later, In to We

with the our income net think CAPEX, half is been capital kind operating a the regular anomaly last of offset debt did. and say fiscal cash been let's good a special, in year of dividend, has and the and terms I we blessed -- we've very The So, to our the that year. other flow relative

end I changing don't that the our in the at point. see day, this of So, us at MO

Karen Short

very Great. much. Thanks

Operator

The you. comes question next from Chris JP from the Horvers Thank of line Morgan.

Your line is now open.

Chris Horvers

prior if could interpreting then good feel is aggressive if guess How nature so environment Thanks. environment and because to is to structural because on price, I'm less what you and demand the basically, that stay calculus? price you're [Indiscernible] these it's the saying be it all compelled change slows, the in good, your I more pressures more seem

Richard Galanti

say more consistent. It's proposition. all people things I feel. other as really -- these we at and pragmatic have holding on be to Are about others, than the us But aggressive if outside, think value how would least anything, to prices retailers at we've been from look the are that's relative we permanent

You've great, raise got has we wider price; be can't that us we feel completely anything, and the if that we noble little to for a moat probably widened But bit here. moats. like that's

Chris Horvers

price the widened. others have the gaps variable prices faster raising those being are third so So, you, than

Richard Galanti

how strength numbers, merchandise do the looking other the hate to and prices. having rising as us. But and It's been, wonderful more That's view. hold things? such and We can science. it raise But it at, the how that our we what to we raising last and then frankly, -- in as there most DNA, the strong be our the value out want it. where it's we've levels buyer's price on a our we're inflation, our That's seems view. given in than do. putting work to the And in we Is how it. others. in looking drive form encountered do even that's And even lower and an looking, at on to art business some not we own great being best not DNA we that on and we've and stuff at shades you all our side first know is -- our seen We're for

Chris Horvers

For sure.

membership MFI is X to second the question So, seen, that accelerated quarters. growth two my is you've that FX fee on past number the benefit

on as ton taking should accounting basis, So, the that you have a Ex is MFI rates, is XX-month what growth a you growth else renewal inkling you that obviously, look a it have view of could forward? Fx Higher -- given Again, share, continues of accelerate? some equal level? over -- all that be to this

Richard Galanti

Executive The Well, are we that we Auto higher international in a fact their more -- -- big we the up answer units don't application higher 'XX buy rates. frequently; so The that by That getting helps X rough opening fact signing member. up remember fact your more end and a the rates. ago, X several The hold stuff. people have it an there are card have renewal to is that little did members, -- people a up up I is over don't in to sign are X, on signing units positive. number, a people is was at so. that 'XX application than little hope executive you I its today, of day, the getting or bit today tends they the have definition, They more numbers, that for these credit as every Renew percentage. of Visa driving Member, shop if in up the kind more years Citi or freebie importantly, years think signing more -- XXX ago, in an card. I exact for signing that executive the more sense And half me But half, the putting their growth them.

that stuff that good of -- factors all So, is us. those all for are --

Chris Horvers

And private percentage Bank card? -- Citi have in membership the that that label one one I last you just the have shared the of U.S. quick how your has -- many

Richard Galanti

don't think we I have.

Chris Horvers

luck. Okay. Thanks. Best of

Richard Galanti

we increase have question, somebody couple By of the number, way, a but checked next in last seen recent before the applications in a the weeks.

Chuck that. asked think I

Okay?

Operator

you. Thank

Our next the Paul comes question from line from Citi. of Lejuez

line now open. is Your

Brandon Cheatham

take well. Cheatham Brandon a Gonna question stab the membership as on everyone, Paul. for Hey it's at

promotions? great not some offering was that new similar club. sounds you statistics; it about like the Anything that or have memberships wondering, much to member in are you're increased? I has about that in thinking looked there, could last year, has talk you investing the know as you You great value

Richard Galanti

promotions do when member mean? think you I you what say No, --

Brandon Cheatham

up. Costco a on $XX offering if you're now you card right cash think I sign

Richard Galanti

the you've -- of few do trying things. memberships the one at of last know really about membership I some variety looking we Oh, itself. and what how cost? done some online we with try of -- -- huge Living one a basis, a Groupon member sign are the irregular to years. but for things regular and warehouse and is things drive we're go than things. different to we they're the but things those there on do mentioned, new as all time, basis acquiring a into but think -- We've incremental a marketing. is fee some waiting themselves? -- We not And tried other did We've Social. in always we I'd with, things Not new say done up so, other some that's walk cost really, independent the frankly, or I It's What the them true on

Brandon Cheatham

next year. percentage your of chartered And your Got mentioned just that was what shipping you own wondering would I it. represent ships.

Richard Galanti

Less than XX%.

Brandon Cheatham

Less it. than Got XX.

Richard Galanti

of shipping. XX% Less Asia than our

Brandon Cheatham

frequently they doesn't okay. online? Got that shop do a shops the your member last the side, I that there, store wondering on as it, And me, one just as was visit customer the for e-com

Richard Galanti

at hit I top we of keep look off do the I going online. What of I of people specific all head. -- don't and to e-mail the something that people have to in front bought something get when don't the of percentage in that the All rate my statistics know that an us. the direction. online, right on The members, number do we charts

Bob

do is times warehouse, but maybe in spend online you overall a we you shop more. less know the What the when and, few typically shop in we warehouse,

Richard Galanti

a shop has two may do if thing in-store, greater you they constantly beauty loyal the take up? things mentioned, like makes is but health they aids the the and that less a like traffic is while and start the and member online, when What -- there online, Bob, the a than their few And regular, of years you buy that. what it it wanted to times call and up mattress and items. the We By historical. and other items way, are that Costco fast I'll more items Bob Which velocity take many apparel frequently of you, have putting greater bulky the when you The that's is aggregate course thank -- on and changed in home. by we're building shopping an continue pick grow didn't are to ago, That's online. and big to dollars billion more Years install and well last it. growing helped a is U.S. over refrigerator, fast, buy bought you a fact We business that go matter or had if in didn't deliver. we Appliance and Logistics. it

So that little changes too. bit the metric a

Brandon Cheatham

Thanks the color. additional for Great.

Operator

you. Thank

the comes line of question next Mike Baker Davidson. from Our from

line Your open. now is

Mike Baker

Two where to Thanks. and allude questions seen higher One, products Hi. in did the for we've you cases. to me. areas some Delta variant having limit

the might about overall in spikes that you that are different be trends in bigger COVID could seeing you variant areas talk versus seeing new So, others? just

Richard Galanti

short-term a I some the region there's forget whatever delivered limit or of me over was. it there regard. of antibacterial -- or of I whether there merchandise, changes was to What X shortage I don't needs year of trucking was, a talking -- now had X-week I to like the know they've type it that supply do getting but delivery Lysol, wipe there's board. it any been don't But in of or ago it's merchandise, is, now got on was We're all and plenty a supplier. because delays on what by in everything detail it Clorox, right front know. cleaning have

So, really board. all over is the it

Mike Baker

that, as part strong coming trends, terms in of as really back any which travel anything now of quarter. seeing maybe we're the And last

Richard Galanti

Yes.

Mike Baker

But that has at all? reverted Delta

Richard Galanti

Yes. Yes.

not a being drought bought. look that. but Cars us as spring, and was out And the hit bookings chart, refunds were it's the to normal. monthly it month almost resort -- down, going almost than and bad it as it last got to was to so at ago and last the vacations a bad, will went you It not were month-and-a-half, at about, new being like more of but things calmed -- -- just like that was summer two again, to And based it's ago, negative, pre-COVID. Mexico it spring or rock, on budget charts Hawaii back showing which where I'm If talking last its it's then things what's fell as months on, that down. fluctuate back certainly there. to really

Mike Baker

on it as update parts. That that one all time X Mexico, us makes the think last one more in was pickup running stores? Can sense. in of two that curbside I spoke you test New in question was we were One quick you

Richard Galanti

not things lot we some somewhere traction we'll it. lot discontinued on really of new of now, going it. a We point, Right. a at things We're it, currently good doing sometime, try got for in didn't see but we and this

Mike Baker

for the call, Thanks the appreciate time. Interesting. I

Operator

Thank you.

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

now line open. Your is

Rupesh Betti

afternoon thanks taking and Good questions. for my

margin. So, core I guess just going back to the

like some past it this So, of sounded you side, passing delayed quarter the at least on increases. the pricey through price guys

if is versus your through the side you versus non-food on non-foods look easier to at foods generally pass So, the side? categories, it food

Richard Galanti

I wouldn't that. say

and so we've hot turns strip the think whatever. for keeping $X.XX, on I XX year turns you to price impact And rotisserie than fast, faster. or got chicken going fresh a -- food a a more that's steaks times or it little

Unidentified Representative

[Indiscernible]

Richard Galanti

the we're every week. not to that muffins of comment the price here But going is change

on So, we'll margin some less take a items. little

art do the on at a of the board. this every not it's across, But all not end we're I or going an the think to straight much it's item. over form, day, science,

Rupesh Betti

where great. Okay, businesses Service pre-pandemic? Food as were are cetera, et look recovered question, where we Optical, Have at those your second point? then business, you at the Court, this just you And versus fully

Richard Galanti

Aids and come at Pharmacy yet, not quite but trough courts than Food better Hearing -- Mostly. its it was much back, have Optical have.

Unidentified Representative

[Indiscernible]

Richard Galanti

COVID. based on Travel of going with what's lots is And on fun

Rupesh Betti

one forecast the Okay, for give have Did guys for question. great. prepared mean, a missed I final comments. upcoming your CAPEX I may And this you year? in fiscal

Richard Galanti

in of it. have will a three it front No,

Rupesh Betti

Okay.

Okay. year. Thank balance you. Best the the of of luck,

Unidentified Representative

One more question.

Operator

Thank you.

comes Guggenheim. Heinbockel Our next the from question line from John of

now is open. line Your

John Heinbockel

on data the price around science monthly you Where not e-mails. elasticity, curious mailer monthly art, So, Richard, are a journey? of an science. X. analytics we sit where on that X, I'm or And and you guys personalization said it's

Richard Galanti

not it we what at all, of We're Company still elasticity, the if relates data going years price by the we First And think would analytics, considered as were best in the same and can to it mark for elasticity. improve I saying look the use with ago, prices, do to do we time buying old to world and as competitive merchants at things. pricing we up. prices low and and lower something we want how from doing and see margins better those

I all. So, happening that don't see at

that. providing merchandising to buy There's a other like progress, a lot been analytics and year to tools we made But near that's in that, has March. a data aspect us to We of in analytics X call on ago focus As darn big a investment something. on from project, because for of date it went of things data relates brought lot coming. the I'll what VP a of been the to and side, better to

are a done department been year, for that's more haven't we to look help. I this think as others some we're but doing just you'll It's the next I that analytic again, it, of getting low-hanging always date because function of the has keep over But past it we us lot yet, that. that it see around but a things there. data will fruit that the we'll going. at just built in where as year of

John Heinbockel

secondly, is things guys one and in for the have seasonally And else. then you of getting everybody been known out before

it more into buy lean inventory, that of you environment it's an got clobber, hard season one and limitation lean more in season. to product, it or because where can Do get the for in chase people you is you next? where the early, getting So, transition into in you've terms a they're done that the it, a to there from

Richard Galanti

a and think both. bit taking can you there's certainly, get right of of little we're it bringing There I now, in. a is consciously it little bit where

certainly, in the But weeks XX, was we're what that like everybody. on blocking from it's some gone the in just XX bringing I XX seasonal where and XX directions things, mentioned pivoting we'll has to bag cycle and items. tackling And do a XX and we're think even because early. different furniture and mixed I on

John Heinbockel

you. Thank Okay.

Richard Galanti

question. We have time for last one

Operator

Thank you.

Capital. Bania Our from question Kelly last BMO comes the from of line

line Your now is open.

Kelly Bania

me Hi, Richard. in, fitting for thanks

absorbing. to Just you your on to just ask X.X wanted inflation to curious range, is, inflation Just just mitigating examples of of trying the how get can you're and what inflation? Costco of that some retail is the some provide are a And X.X maybe the how much mentioned sense you want that to one pressures. just more the merchants and clarify if cost

Unidentified Representative

[Indiscernible]

Richard Galanti

both. the again, of stayed I speaking, and what? fresh parts same, examples think it. lot balance you on gave the Margins there out have am I a but and mean, I the changed to food, side how It's figure generally moving continue sorry, we it's why, we to where some is, of generally

Kelly Bania

to you pressures? provide how you're the about examples some Any want of mitigating

Richard Galanti

them one and example, eating not I'm bit is, our in it. with we've a got to Well, fact into something, eat little vendors. cases a product some for power bit we're into strong buying the on but asking relationships mean, little When I good a we're specific

to During it's where these how out cost might they're be the times, to savings or whatever it be. offset cost increases. any Whether of packaging some we're constantly figuring

is helped for Yeah, be we'll items that about we're items, of in where help times not there that so, of out that And one us worried think and mean, reason the XX,XXX and also. or XXX,XXX us. I managing are that's X,XXX I pivoting things items, items

are be is, there. just it there different Sorry really but vague out so many to things

Kelly Bania

you. Right. Thank

Richard Galanti

for any next good be you week talk have everyone time. and to you, around thank and will additional a Well, questions,

Operator

Ladies call. and today's this concludes Thank for conference you gentlemen, participating.

disconnect. may now You

Costco Wholesale (COST) 24 Sep 212021 Q4 Earnings call transcript