Group 1 - President Trump is threatening the pharmaceutical industry with 100% tariffs unless they manufacture or build plants in the U.S. [1] - A 25% tariff on imported heavy trucks is set to take effect on October 1st [1] - Retaliation to these tariffs has reduced foreign demand for American crops, making them more expensive abroad [2] Group 2 - Costco's quarterly profit and revenue have exceeded market expectations [2] - The CFO of Costco mentioned efforts to offset higher tariff costs by introducing new items from its Kirkland private label brand [3] Group 3 - Meta has announced pricing for ad-free versions of Facebook and Instagram in the UK, costing over $5 a month on mobile platforms [4] - Amazon is set to pay up to $2.5 billion to settle an FTC complaint regarding misleading Prime service sign-ups [4][5] - The settlement includes $1 billion in civil penalties for the government and $1 to $1.5 billion for affected customers [5]

Tariffs and Trade Policy - President Trump announced new tariffs, including 100% on branded and patented pharmaceutical drugs, effective October 1 [2][3] - Additional tariffs include 50% on kitchen cabinets and bathroom vanities, 30% on upholstered furniture, and 25% on heavy trucks [3] Economic Indicators - The core personal consumption expenditures (PCE) price index is expected to show a 2.9% year-over-year increase for August, unchanged from July [9] - The overall PCE price index, including food and energy, is projected to increase by 2.7% year-over-year, up from 2.6% in July [9] - Consumer spending is anticipated to rise by 0.4% month-over-month, slowing from a 0.5% increase in July, while personal income is projected to increase by 0.3% month-over-month, down from 0.4% [10] Government Operations and Employment - Federal agencies have been directed to prepare for mass firings if the government shuts down on October 1, affecting programs without alternative funding [4][5] - The Office of Management and Budget (OMB) has instructed agencies to issue reduction-in-force notices for employees in programs inconsistent with Trump's priorities [5][6]

Core Insights - Costco Wholesale reported its fourth quarter and fiscal year 2025 earnings, highlighting new global locations, digital upgrades, and expanded hours for executive members [1][8] - The company has seen a 1% increase in weekly US sales due to the new exclusive morning hours for executive members and additional Saturday evening hours for all US members [2] Expansion and Membership - In the fourth quarter, Costco opened 10 new warehouses, including locations in Canada, Korea, Sweden, and five in the US, bringing the total to 914 warehouses globally [3] - The company plans to open another 35 warehouses in fiscal year 2026, indicating ongoing expansion opportunities both domestically and internationally [4] Membership Growth and Sales Performance - Costco's paid membership increased to 81 million, a 6.3% rise from the previous year, with renewal rates at 92.3% in the US and Canada and 89.8% worldwide [6] - Quarterly net sales rose 8% to $84.4 billion, up from $78.2 billion a year ago, while fiscal year net sales climbed 8.1% to $269.9 billion compared to $249.6 billion last year [7]

Market Overview - The stock market experienced a downturn, with the S&P 500 and Nasdaq closing lower, and the Dow Jones declining over 170 points [1] - Major U.S. indices saw the Dow Jones Industrial Average down nearly 0.4% to 45,947.32, the S&P 500 off 0.5% to 6,604.72, and the Nasdaq lower by 0.5% at 22,384.69 [1] Costco Wholesale Corporation - Costco reported better-than-expected fourth-quarter results, with revenue rising 8% year-over-year to $86.16 billion and adjusted earnings at $5.87 per share [2] - Comparable sales increased by 5.7%, and membership fee revenue rose to $1.72 billion following the first fee hike since 2017 [2] - Costco shares dipped 0.88% to $935.04 in after-hours trading [2] Oracle Corporation - Oracle's stock fell by 5.55% to close at $291.33, with a high of $298.75 and a low of $288.55 [3] - The stock rose 0.44% to $292.60 in after-hours trading [3] - An executive order by President Trump approved a $14 billion deal for Oracle to manage TikTok's U.S. security operations and provide cloud services [4] International Business Machines Corporation (IBM) - IBM shares surged 5.20% to $281.44, with an intraday peak at $284.23 and a low of $271.15 [5] - The rise followed IBM's announcement of a quantum computing breakthrough in collaboration with HSBC, enhancing bond trading predictions [5] CarMax Inc - CarMax shares plummeted 20.07% to $45.60, marking a new 52-week low [6] - The decline followed disappointing second-quarter results, with EPS falling to $0.64 versus expectations of $1.09, and sales dropping 6% year-over-year to $6.59 billion [6] BlackBerry Limited - BlackBerry's stock rose 8.90% to $4.65, reaching a high of $4.66 and a low of $4.19 [7] - The company reported strong second-quarter results, with earnings of $0.04 per share, surpassing the consensus estimate of $0.01, and revenue rose 3% year-over-year to $129.6 million [8]

Group 1 - Costco reported total revenue of $86.16 billion for Q4 FY2025, an increase of 8.1% year-over-year, slightly above analyst expectations of $86.03 billion [1] - Diluted earnings per share (EPS) reached $5.87, a nearly 11% increase year-over-year, exceeding analyst expectations of $5.80 [1] - Same-store sales growth, excluding gasoline and foreign exchange fluctuations, was 6.4%, higher than the expected 6.21% [1] Group 2 - Membership fees increased by 14% year-over-year [1] - E-commerce sales, excluding gasoline and foreign exchange fluctuations, grew by 13.5%, continuing to show double-digit growth [1] - Comparable sales in the U.S. increased by 5.1% in Q4, with a full-year growth of 6.2% [1] Group 3 - Comparable sales in Canada grew by 6.3% in Q4, with a full-year growth of 5.0% [1] - Other international markets saw a 8.6% increase in comparable sales for Q4, with a full-year growth of 4.8% [1] - E-commerce channel sales grew by 13.6% in Q4, with a full-year growth of 15.6% [1]

Market Performance - The blue-chip Dow index closed down 173 points, a decrease of 0.38% for the day [2] - The S&P 500 fell by 33 points, or 0.50%, while the Nasdaq also dropped by 0.50%, losing 113 points [2] - The small-cap Russell 2000 decreased by 25 points, representing a decline of 1.05% [2] - Bond yields are rising, with the 10-year yield at 4.17% and the 2-year yield at 3.66% [2] Economic Indicators - Existing Home Sales surged by 20.5% in August, totaling 4.00 million seasonally adjusted annualized units, slightly below expectations of 4.01 million but above the consensus estimate of 3.96 million [3] - The Midwest region experienced the largest gains in home sales, although the median home price there is 22% lower than the national median [3] Company Earnings - Costco reported fiscal Q4 earnings of $5.87 per share, exceeding the Zacks consensus of $5.81, but revenues were slightly below expectations at $86.16 billion compared to the anticipated $86.18 billion [4] - This marks the third earnings beat for Costco in the last four quarters, yet shares are down slightly in late trading, with a year-to-date increase of around 3% [4] Upcoming Economic Data - The Personal Consumption Expenditures (PCE) report is anticipated to impact the stock market, with the August data set to be released before the market opens on Friday [5] - Personal Income is expected to cool to 0.3% in August from 0.4% the previous month, while Personal Spending is projected to remain steady at 0.5% [6] - The PCE Index is forecasted to increase by 0.3% month over month for the headline and 0.2% for the core, with year-over-year PCE expected to rise by 10 basis points to 2.7% [6][7]

Financial Data and Key Metrics Changes - Net sales for Q4 fiscal year 2025 reached $84.43 billion, an increase of 8% from $78.18 billion in the same quarter last year [12] - Net income for Q4 was $2.61 billion, or $5.87 per diluted share, up 11% from $2.35 billion, or $5.29 per diluted share in the previous year [12] - Membership fee income increased to $1.72 billion, a growth of 14% year over year [14] Business Line Data and Key Metrics Changes - E-commerce sales exceeded $19.6 billion, increasing over 15% [7] - Comparable sales were up 5.7%, or 6.4% adjusted for gas deflation and foreign exchange [12] - Gross margin for Q4 was reported at 11.13%, up 13 basis points year over year [17] Market Data and Key Metrics Changes - Traffic or shopping frequency increased by 3.7% worldwide [13] - The average transaction or ticket was up 1.9% worldwide, adjusted for gas deflation and FX [14] - The U.S. and Canada renewal rate was 92.3%, while the worldwide rate was 89.8% [15] Company Strategy and Development Direction - The company plans to open 35 new warehouses in fiscal year 2026, indicating continued expansion both domestically and internationally [5] - There is a focus on increasing Kirkland Signature product sourcing in the regions where items are sold to lower costs and reduce emissions [8] - The company aims to enhance member experience through improved checkout technology and digital enhancements [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in growing market share despite macroeconomic uncertainties [11] - The company is optimistic about the membership base growth, particularly among younger members [40] - Management noted that the membership renewal rate is expected to decline slightly due to a higher number of online sign-ups [41] Other Important Information - Capital expenditure for Q4 was approximately $1.97 billion, with a total of under $5.5 billion for the full year [20] - The company celebrated milestones such as the 40th anniversary of its $1.50 hot dog and soda combo [7] - Inflation remained in the low to mid-single digit range, with specific commodities experiencing varying inflation rates [25] Q&A Session Summary Question: Awareness of extended member hours and potential comp lift - Management indicated that communication about extended hours has been effective, with a 1% comp lift observed [32][33] Question: Membership renewal rate expectations - Management acknowledged that the renewal rate may continue to decline due to a higher number of online sign-ups but remains optimistic about overall membership growth [38][40] Question: Core margins and price increases - Management reported a 29 basis point increase in core margins, with improvements across all main categories [45][47] Question: Sustainability of membership fee income growth - Management expressed confidence in continued growth opportunities for membership income, driven by new warehouse openings and younger member engagement [56][57] Question: E-commerce and grocery demand - Management noted strong growth in Instacart-driven traffic and emphasized the importance of fresh foods in meeting online grocery demand [66][68]

Financial Data and Key Metrics Changes - Net sales for Q4 2025 reached $84.43 billion, an increase of 8% from $78.18 billion in Q4 2024 [10] - Net income for Q4 was $2.61 billion, or $5.87 per diluted share, up 11% from $2.35 billion, or $5.29 per diluted share in the same quarter last year [10] - Membership fee income increased to $1.72 billion, a 14% year-over-year growth [11] Business Line Data and Key Metrics Changes - E-commerce sales exceeded $19.6 billion, increasing over 15% year-over-year [5] - Comparable sales were up 5.7%, or 6.4% adjusted for gas deflation and foreign exchange [10] - Fresh sales were up high single digits, with double-digit growth in meat [20] Market Data and Key Metrics Changes - Traffic or shopping frequency increased by 3.7% worldwide [11] - The average transaction or ticket was up 1.9% worldwide, adjusted for gas deflation and FX [11] - Gas volumes saw positive low single digits, but gas comps were negative mid-to-high single digits due to lower average prices [22] Company Strategy and Development Direction - The company plans to open 35 new warehouses in fiscal year 2026, indicating continued expansion opportunities [4] - There is a focus on moving more Kirkland Signature product sourcing closer to the markets where they are sold to lower costs and reduce emissions [6] - The company is enhancing member experience through improved checkout technology and digital enhancements [7][25] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the ability to grow market share despite macroeconomic uncertainties [9] - The company is focused on improving renewal rates for new online members through targeted digital communications [15][40] - Overall inflation remains in the low to mid-single digit range, with specific commodities experiencing varying inflation rates [22][75] Other Important Information - Capital expenditure in Q4 was approximately $1.97 billion, with a total of under $5.5 billion for the full year [18] - The company celebrated milestones such as the 40th anniversary of its hot dog and soda combo and the 30th anniversary of Kirkland Signature [5] - Digital e-commerce site traffic was up 27%, with strong sales in various categories [24] Q&A Session All Questions and Answers Question: Awareness of extended member hours and potential comp lift - Management communicated effectively about the extended hours, resulting in a 1% comp lift, with expectations for further growth as awareness increases [30][31] Question: Expected decline in membership renewal rates - Management anticipates a continued decline in renewal rates due to a higher number of online sign-ups, but overall membership engagement remains strong [34][39] Question: Insights on core margins and price increases - Core margins improved by 29 basis points year-over-year, with a focus on maintaining value while navigating tariffs [42][44] Question: Sustainability of warehouse growth pace - The company sees potential for continued growth in warehouse openings, with a focus on making informed decisions rather than hitting specific targets [68][70] Question: Impact of tariffs on gross margin - Management is closely monitoring the impact of tariffs and is prepared to adjust pricing strategies as necessary [80]

Group 1 - Costco's extended operating hours this summer have resulted in an estimated 1% increase in weekly US sales since implementation, which has been positively received by members [1] - The company reported full-year revenue of $269.9 billion, reflecting an 8.1% increase compared to the previous year [1] - The extended hours and new perks have led to a higher percentage of shoppers upgrading their memberships, with Costco finishing the quarter with 81 million paid memberships, including 38.7 million executive tier memberships [2] Group 2 - The company gained 1.4 million additional memberships during the quarter, of which 1.1 million were executive tier memberships [2] - Foot traffic data indicates that the adjustment in operating hours is helping Costco achieve key goals, such as encouraging shoppers to visit more frequently and quickly [2] - Analysts view the changes as a positive development for the company, suggesting that it is a win for Costco [3]

Financial Performance - Costco reported a net income of $2.61 billion, or $5.87 per share, for the fiscal fourth quarter, an increase from $2.35 billion, or $5.29 per share, a year earlier [1] - Revenue for the quarter was $86.16 billion, surpassing the expected $86.06 billion [7] Sales Metrics - Same-store sales rose by 6.4% excluding the impact of gas prices and foreign exchange, marking two consecutive quarters of decelerating growth [2] - E-commerce sales increased by 13.5% compared to the previous year, also excluding gas prices and foreign exchange impacts [2] Market Position and Strategy - Costco has opened new locations and attracted younger members, with nearly half of new signups being individuals under 40 [3] - The company is well-positioned to handle higher tariffs due to its grocery-focused sales and flexible merchandise selection [4] - Actions have been taken to mitigate tariff-related costs, including expediting orders and sourcing more items locally [5] Stock Performance - Over the past five years, Costco's shares have increased by approximately 180%, but have underperformed in the current year with just over 2% growth compared to the S&P 500's over 12% gains [6]