Core Viewpoint - Costco Wholesale Corporation is expected to report improved revenues and earnings for its fiscal third quarter, driven by an increase in comparable store sales and strong customer traffic [2][5]. Financial Performance Expectations - The Zacks Consensus Estimate for Costco's fiscal third-quarter revenues is $63.1 billion, reflecting a 7.9% year-over-year increase [5]. - The estimated earnings per share (EPS) for the fiscal third quarter is $4.25, indicating a 12.4% rise from the previous year [5]. - Comparable sales in the U.S. rose by 7.1% in April, surpassing estimates despite calendar-related issues [2]. Customer Traffic and Sales Growth - U.S. store traffic increased by 5%, while global traffic rose by 4.2%, with average transaction size growing by 2.4% year-over-year [3]. - E-commerce sales saw a significant growth of 13% in April compared to the same month last year [3]. Regional Performance Insights - Core sales in Canada and other international markets faced challenges due to price increases and macroeconomic pressures, but strong sales in the Southeast, Midwest, and Northeast U.S. regions helped offset these declines [4]. Membership Model and Customer Loyalty - Costco's membership model has proven successful, contributing to long-term growth prospects, with a current renewal rate of 93% [7][9]. - Recent increases in membership fees are expected to enhance profit margins and provide flexibility in managing costs [8]. Operational Efficiency - The company has improved its supply chain efficiency, increased item turnover, and simplified inventories, positioning itself as a top performer in the retail sector [10]. Trading Strategy Post-Earnings - The anticipated increase in comparable store sales suggests that upcoming quarterly results will be positive, likely leading to a rise in stock price [11]. - Technical indicators show Costco stock trading above both the short-term 50-day moving average and long-term 200-day moving average, indicating a bullish trend [12].

Financial Data and Key Metrics Changes - The company reported fourth quarter net sales of $5.1 billion, an increase of 5.4% year over year on a comparable thirteen-week basis [27] - Merchandise comparable sales, excluding gas sales, increased by 4.6% year over year, driven by strong traffic [27] - Adjusted earnings per share for the quarter was $0.93, reflecting strong membership and traffic, merchandising improvements, and digital conveniences [31] Business Line Data and Key Metrics Changes - The perishables, grocery, and sundries division delivered over 4% comparable growth in the fourth quarter, with perishables leading the way [8] - General merchandise and services division comparable sales grew by more than 5% in the fourth quarter, with notable performance in consumer electronics and toys [10][11] - Digitally enabled comparable sales grew by 26% year over year, contributing significantly to overall growth [28] Market Data and Key Metrics Changes - Membership reached an all-time high of over 7.5 million members, with a renewal rate of 90% [7] - The company opened seven new clubs and 12 gas stations in fiscal 2024, marking entry into its 21st state [21] - The company expects to open 25 to 30 clubs across the next two fiscal years, indicating robust growth plans [21] Company Strategy and Development Direction - The company focuses on four strategic priorities: improving member loyalty, enhancing shopping experience, delivering value conveniently, and expanding footprint [12] - Investments in digital conveniences and merchandising strategies are aimed at driving member engagement and loyalty [19][20] - The company is committed to maintaining a strong pricing position, offering up to 25% better pricing than grocery competitors [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to navigate economic uncertainties and consumer behavior changes, emphasizing the importance of delivering value [24] - The company anticipates comp sales growth excluding gas of 2% to 3.5% for fiscal 2025, aligning with long-term growth expectations [36] - Management highlighted the importance of maintaining strong member engagement and loyalty as key drivers for future growth [19] Other Important Information - The company reported a year-over-year decrease in merchandise gross margins by approximately 10 basis points, attributed to rising costs in key products [30] - Capital expenditures for fiscal 2024 were approximately $588 million, supporting the growing real estate pipeline [33] - The company ended the fourth quarter with the lowest levels of debt since its IPO, indicating a strong balance sheet [33] Q&A Session Summary Question: Can you provide more color around the cadence of the comp throughout the fourth quarter and the outlook for 2025? - Management noted strong performance throughout the fourth quarter, with November and December being particularly good months, and January being the strongest [46] - Traffic momentum has continued into Q1, although there is increased sensitivity to discretionary purchasing due to economic uncertainty [47] Question: Can you remind us how you managed tariff risks in the past and your current thoughts on it? - Management acknowledged that tariffs could raise prices and disrupt supply chains but emphasized that periods of rising prices often benefit the company as consumers seek value [55] Question: What is driving the strength of the digital business? - The digital business is driven by convenience, with services like BOPIC, curbside pickup, and same-day delivery contributing to increased member spending [56] Question: Can you provide insights on the exposure to China and Mexico? - The company has limited exposure to China, with only a few percent of its business imported directly, while exposure to Canada and Mexico is greater but not negatively impactful [66] Question: How is the performance of new clubs and the confidence in accelerating growth? - Management expressed strong satisfaction with the performance of new clubs, which are exceeding plans on both top and bottom lines, and highlighted a robust pipeline for future openings [70]