Costco Wholesale (NasdaqGS:COST) December 2025 Update Summary Industry and Company Overview - The conference call pertains to Costco Wholesale, a leading retail company known for its membership-based warehouse club model Core Points and Arguments - **Sales Performance**: - Net sales for November reached $23.64 billion, marking an increase of 8.1% from $21.87 billion in the same month last year [2] - Comparable sales for the month were reported as follows: - US: 6.0% - Canada: 6.9% - Other international: 11.4% - Total company: 6.9% - Digitally enabled sales: 16.6% [2] - **Comparable Sales Excluding Gas and FX**: - Total company comparable sales, excluding gas sales and foreign exchange impacts, were 7.0% [3] - Comparable sales excluding gasoline price impacts were: - US: 5.8% - Canada: 8.3% - Other international: 8.0% - Total company: 6.4% - Digitally enabled: 16.3% [2] - **Traffic and Transaction Trends**: - Comp traffic increased by 3.8% worldwide and 3.0% in the US [3] - Average transaction value increased by 3.0%, with a 2.5% increase when excluding gas inflation and foreign exchange impacts [3] - **Regional Performance**: - Strongest comparable sales in the US were observed in the Northeast, Midwest, and Southeast regions [4] - Internationally, Australia, Taiwan, and the UK showed the strongest results [4] - **Merchandising Highlights**: - Foods and sundries experienced positive mid to high single-digit growth, with strong performance in candy, food, and sundries [4] - Fresh foods also saw mid to high single-digit growth, particularly in meat and bakery departments [4] - Non-foods grew in the mid-single digits, with jewelry, tires, and health and beauty performing well [4] - Ancillary business sales increased by high single digits, with pharmacy, food court, and optical being top performers [4] - **Gas Sales**: - Gas sales increased in the low to mid-single digits, driven by an increase in gallons sold year over year [5] Additional Important Information - The call included forward-looking statements that involve risks and uncertainties, which may cause actual results to differ from those projected [1] - The next reporting period will cover five weeks from December 1, 2025, to January 4, 2026 [5]

Core Viewpoint - Home Depot is set to report its third-quarter earnings on November 18, with an anticipated update on strategic priorities and long-term outlook at the December Analyst Conference. Bank of America maintains a Buy rating with a price target of $450 [1][6]. Sales Performance - Bank of America projects a 1.3% increase in comparable sales for Home Depot in the third quarter of 2026, slightly above the previous quarter's 1.0% [2]. - Observed sales data from Bloomberg indicates a 1.6% rise, supporting the sales growth outlook [2]. - The company experienced strong sales trends in August, but these softened in October due to the comparison with last year's hurricane-related sales boost [3]. Financial Forecast - For the full year 2026, revenue is estimated at $163.91 billion and EPS at $14.95, aligning with consensus estimates. For fiscal 2027, revenue is projected to rise to $170.68 billion with EPS of $16.25 [7]. Strategic Initiatives - Home Depot's acquisition of Gypsum Management & Supply (GMS) for an implied enterprise value of $5.5 billion enhances its Pro capabilities, adding drywall, steel framing, and ceilings to its offerings [4]. - The bank highlights trade credit expansion and improved order management as key strategies to deepen penetration with approximately 9 million Pro customers [5]. Market Position - Home Depot is well-positioned amid a challenging macroeconomic environment, benefiting from structural housing-related tailwinds. Despite deferrals in large-ticket projects due to high mortgage rates, the company is expected to gain market share through expanded delivery and Pro-focused services [6].

Core Insights - Restaurant Brands International Inc. (RBI) reported a strong financial performance for Q3 2025, with system-wide sales growth of 6.9% year-over-year, driven by a 12.1% increase in international sales [1] - Comparable sales accelerated to 4.0%, with notable performances from Burger King International (6.4%), Tim Hortons Canada (4.2%), and Burger King US (3.2%) [1] - RBI is on track to achieve over 8% organic Adjusted Operating Income growth by 2025, supported by strong franchisee alignment and disciplined execution [1] Financial Highlights - Total revenues for Q3 2025 reached $2,449 million, up from $2,291 million in Q3 2024, marking a 6.9% increase [1] - Adjusted Operating Income (AOI) for Q3 2025 was $702 million, reflecting an 8.8% growth compared to $652 million in Q3 2024 [1] - Net income from continuing operations increased to $440 million in Q3 2025, compared to $357 million in Q3 2024 [1] Segment Performance - Tim Hortons segment reported a system-wide sales growth of 4.8% in Q3 2025, with comparable sales growth of 4.2% [5] - Burger King segment experienced a system-wide sales growth of 2.3% in Q3 2025, with comparable sales growth of 3.1% [9] - Popeyes segment showed a system-wide sales growth of 0.7% in Q3 2025, with comparable sales declining by 2.4% [15] - Firehouse Subs segment achieved a significant system-wide sales growth of 10.7% in Q3 2025, with comparable sales growth of 2.6% [16] Strategic Initiatives - RBI is executing a multi-year "Reclaim the Flame" plan for Burger King, investing up to $700 million through 2028 to enhance sales growth and franchisee profitability [13] - The company is actively working on refranchising the majority of Carrols Burger King restaurants and seeking new partners for Popeyes China and Firehouse Subs Brazil [2] - The acquisition of Burger King China has been classified as held for sale, aligning with RBI's strategy to partner with experienced local operators [2][3]

Core Insights - Cheesecake Factory reported revenue of $907.23 million for the quarter ended September 2025, marking a year-over-year increase of 4.8% and an EPS of $0.68 compared to $0.58 a year ago, with an EPS surprise of +13.33% [1] - The revenue fell short of the Zacks Consensus Estimate of $912.96 million by -0.63% [1] Financial Performance Metrics - Comparable restaurant sales for The Cheesecake Factory were 0.3%, below the seven-analyst average estimate of 1.2% [4] - The number of company-owned restaurants for The Cheesecake Factory remained at 216, matching the seven-analyst average estimate [4] - Revenue for The Cheesecake Factory restaurants was $651.38 million, slightly below the $655.31 million estimated by six analysts, representing a year-over-year change of +0.6% [4] Other Business Segments - North Italia reported comparable restaurant sales of -3%, significantly lower than the average estimate of 0.3% [4] - Revenue for North Italia was $83.48 million, below the six-analyst average estimate of $84.85 million, but showed a year-over-year increase of +16.1% [4] - Revenue from Other segments was $94.35 million, exceeding the six-analyst average estimate of $91.61 million, with a year-over-year change of +19.7% [4]

Group 1 - The results were presented positively based on 'comparable sales' growth, leading to a favorable stock reaction [1] - Despite the positive presentation, underlying trends indicate more challenging conditions for the companies involved [1] - The focus of Quipus Capital is on operational aspects and long-term earnings power rather than market-driven dynamics [1] Group 2 - The investment strategy emphasizes holding companies independently of future price movements, with most recommendations being holds [1] - A small fraction of companies are considered suitable for buying at any given time, highlighting a cautious investment approach [1] - Hold articles are intended to provide valuable information for future investors and introduce skepticism in a bullish market [1]

Core Insights - Costco reported net sales of $20.89 billion for July, marking an 8.5% increase from $19.26 billion last year [1] - JP Morgan analyst Christopher Horvers raised the price forecast for Costco shares from $1,115 to $1,160, maintaining an Overweight rating [1] Sales Performance - Canada and Other International core comps outperformed expectations, with growth rates of 9.1% versus 5.7% and 7.5% versus 6.4% respectively [2] - U.S. growth was driven by the Northwest, Midwest, and Southeast regions, while Australia, Taiwan, and Mexico led international growth [2] E-commerce and Sales Strategies - E-commerce sales increased by 14.9% excluding foreign exchange impacts, with July's cannibalization headwind easing to 50 basis points [3] - The introduction of extra hours for executive members has contributed approximately a 1.5-point lift to comparable sales [4] Future Expectations - Horvers anticipates that Costco will detail the sales benefits versus operating costs in its fourth-quarter conference call in September, with potential acceleration during peak holiday shopping [5] - July's sales benefited from easier year-over-year comparisons due to past hurricanes and a consumer pause in late July 2024 [5] Market Position and Sales Trends - Non-food sales remained strong despite a two-year low in monthly gold bar growth, with comparison ease expected to continue beyond August [6] - Costco is recognized for its successful entry into every market it has entered, with its club model ranking just behind auto parts as a top-performing retail sector [6]

Costco Wholesale (COST) 2025 Update Summary Industry Overview - The call pertains to the retail industry, specifically focusing on Costco Wholesale's performance during the five-week retail month of June 2025. Key Financial Metrics - **Net Sales**: Reported net sales for June 2025 were $26.44 billion, representing an 8% increase from $24.48 billion in June 2024 [2] - **Comparable Sales**: - US: 4.7% - Canada: 6.7% - Other International: 10.9% - Total Company: 5.8% - E-commerce: 11.5% [2] - **Comparable Sales Excluding Gas and FX**: - US: 5.5% - Canada: 7.9% - Other International: 8.2% - Total Company: 6.2% - E-commerce: 11.2% [3] Traffic and Transaction Insights - **Traffic Growth**: Comp traffic increased by 3.4% worldwide and 2.8% in the US [4] - **Average Transaction Value**: - Worldwide average transaction value increased by 2.4%, and by 2.8% when excluding gas deflation and foreign exchange impacts [5] Regional Performance - **Strongest US Regions**: Northwest, Midwest, and Southeast showed the best comparable sales performance [5] - **International Performance**: Australia, Mexico, and Taiwan reported the strongest results among other international markets [6] Merchandising Highlights - **Food Categories**: - Foods and sundries showed positive mid-single-digit growth - Fresh foods increased by high single digits, with meat and produce being top performers [6][7] - **Non-food Categories**: - Positive mid to high single-digit growth, with jewelry, majors, and gift cards performing well [7] - **Ancillary Business Sales**: Experienced a decline in low single digits, while pharmacy, hearing aid, and optical departments were top performers [8] External Factors Impacting Sales - **Gas Price Deflation**: Negatively impacted total reported comparable sales by approximately -0.9% [4] - **Foreign Currency Impact**: - Canada: +0.2% - Other International: +3.4% - Total Company: +0.5% [4] Future Outlook - The next reporting period will cover four weeks from July 7 to August 3, 2025, compared to the same period in 2024 [8]

Core Viewpoint - JPMorgan analyst Christopher Horvers has lowered estimates for Lowe's Companies Inc. ahead of its first-quarter earnings release, indicating a more challenging environment than previously anticipated [1][4]. Group 1: First Quarter Estimates - First-quarter comparable sales estimates for Lowe's have been cut to -2.7%, which is below the Street's consensus of -1.7% and broader buyside expectations of a decline between 2% to 3.5% [1][2]. - Lowe's had previously guided for a -2% comparable sales for the first quarter and expected flat comps for the first half, anticipating a ~$400 million shift of spring sales into the second quarter [2][3]. Group 2: Weather Impact - The company faced significant headwinds from unfavorable DIY weather conditions earlier in the quarter, leading to underperformance compared to Home Depot, even as weather conditions improved later [2][3]. - The second quarter is expected to have easier weather comparisons, but estimates have been slightly lowered to +2% from +3% due to first-quarter underperformance and uncertain weather outlook [3]. Group 3: Earnings and Guidance - The estimated first-quarter EPS for Lowe's is $2.87, compared to the Street's estimate of $2.91 [3]. - Given the expectation of missing the first-quarter outlook, Lowe's is anticipated to adjust its full-year guidance towards the lower end of flat comparable sales and around a 12.3% operating margin [4]. - The company is expected to reiterate confidence in managing tariffs and safeguarding margins despite a less favorable scenario [4].

Sales Performance - Net sales reached $62.5 billion, representing a 9.1% growth[4] - Comparable sales increased by 6.8%[4] - E-commerce comparable sales grew by 20.9%, and adjusted e-commerce comparable sales (excluding FX impacts) increased by 22.2%[4] - US comparable sales increased by 8.3%, while adjusted US comparable sales increased by 8.6%[6] - Comparable ticket increased by 1.0%, while adjusted comparable ticket increased by 3.2%[4] - Comparable traffic increased by 5.7%[4] Financial Highlights - Gross margin was 10.85%, a 5 bps increase compared to Q2 FY'24[7] - Net income diluted EPS was $1.79 billion, a 2.6% growth[7] Membership Metrics - Membership income grew by 7.4%, or 9.4% excluding FX impacts[9] - Worldwide membership renewal rate was 90.5%, with the US/CN renewal rate at 93.0%[9] - Paid memberships reached 78.4 million, a 6.8% increase[9] - Total cardholders reached 140.6 million, a 6.6% increase[9] - Executive memberships totaled 36.9 million, with a penetration of sales to executive members at 73.8%[9] Warehouse Expansion - The company plans to expand to a total of 915 warehouses by the end of FY'25, with 629 in the US, 111 in Canada and 175 in other international locations[14]

Core Viewpoint - Costco reported a revenue of $63.72 billion for the quarter ended February 2025, marking a 9% year-over-year increase, with an EPS of $4.02 compared to $3.71 a year ago, indicating strong financial performance despite a slight EPS miss against consensus estimates [1] Financial Performance - Revenue of $63.72 billion exceeded the Zacks Consensus Estimate of $63.22 billion by 0.79% [1] - EPS of $4.02 was below the consensus estimate of $4.09, resulting in an EPS surprise of -1.71% [1] - Membership fees revenue was reported at $1.19 billion, slightly below the average estimate of $1.21 billion, but showed a year-over-year increase of 7.4% [4] - Net sales revenue reached $62.53 billion, surpassing the average estimate of $62.08 billion, reflecting a year-over-year growth of 9.1% [4] Comparable Sales Metrics - Total comparable sales increased by 9.1%, outperforming the eight-analyst average estimate of 6.6% [4] - U.S. comparable sales rose by 8.3%, exceeding the average estimate of 6% [4] - Comparable sales in Canada increased by 4.6%, falling short of the average estimate of 6.1% [4] - Comparable sales for Other International markets were reported at 1.7%, significantly below the average estimate of 5.7% [4] Warehouse Metrics - Total number of warehouses worldwide was reported at 897, slightly below the average estimate of 903 [4] - In the U.S. and Puerto Rico, the number of warehouses was 617, compared to the estimated 620 [4] Stock Performance - Costco shares returned +0.5% over the past month, while the Zacks S&P 500 composite declined by -3.5% [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance against the broader market in the near term [3]