Summary of Costco Wholesale (COST) July Sales Conference Call Company Overview - **Company**: Costco Wholesale (COST) Key Points and Arguments 1. **Sales Performance**: - July same-store sales (SSS) excluding gas and foreign exchange (FX) increased by **7.0%**, surpassing consensus expectations of **5.7%** and up from **6.2%** in June [1] - U.S. comparable sales (ex-gas) were reported at **6.5%**, exceeding consensus of **5.6%** and **5.5%** in June [1] 2. **Traffic Trends**: - Worldwide traffic grew by **4.3%** in July, compared to **3.4%** in June [2] - U.S. traffic also accelerated to **4.3%** from **2.8%** in June [2] 3. **Ticket Size**: - Global ticket size (ex-gas/FX) increased by **2.6%**, slightly down from **2.8%** in June [2] - U.S. ticket size (ex-gas) was reported at **2.2%**, down from **2.7%** in June [2] 4. **Cannibalization Impact**: - The company noted a negative impact from cannibalization of approximately **50 basis points** in July [1] 5. **Category Performance**: - Fresh food sales were up high single digits (HSD), with notable strength in meat and bakery [9] - Food & Sundries grew mid single digits (MSD), driven by cooler, candy, and food items [9] - Non-foods increased HSD, particularly in gift cards, jewelry, and men's apparel [9] - Ancillary business saw a decrease in low single digits (LSD), with pharmacy, optical, and hearing aids being top performers [9] Valuation and Risks 1. **Investment Rating**: - Costco is rated as a **Buy** with a 12-month price target of **$1,133**, indicating an upside potential of **17.0%** from the current price of **$968.56** [10][12] 2. **Financial Projections**: - Projected revenue for FY 2025 is **$254.45 billion**, increasing to **$310.24 billion** by FY 2027 [12] - Projected EBITDA for FY 2025 is **$11.52 billion**, growing to **$15.45 billion** by FY 2027 [12] 3. **Risks**: - Potential risks include competition from grocery, convenience, big-box, and e-commerce sectors; commodity and FX headwinds; softening consumer demand; macroeconomic challenges; and supply chain issues [10] Additional Important Information - **Market Capitalization**: Approximately **$430 billion** [12] - **Enterprise Value**: Approximately **$421.7 billion** [12] - **Earnings Per Share (EPS)**: Projected EPS for FY 2025 is **$16.56**, increasing to **$21.51** by FY 2027 [12] - **Debt Metrics**: Net debt to EBITDA ratio is projected to be negative, indicating a strong balance sheet [12] This summary encapsulates the key insights from the conference call regarding Costco's sales performance, traffic trends, category performance, valuation, risks, and additional financial metrics.