Financial Data and Key Metrics Changes - Net income for Q1 2026 was $2.001 billion, or $4.50 per diluted share, up from $1.798 billion, or $4.04 per diluted share in Q1 2025, reflecting a 13.6% growth excluding discrete tax items [14][15] - Net sales increased by 8.2% to $65.98 billion from $60.99 billion in the previous year, with comparable sales growth of 6.4% [15][16] - Membership fee income rose to $1.329 billion, a 14% increase year-over-year, driven by membership growth and upgrades [16][17] Business Line Data and Key Metrics Changes - Digital sales showed strong growth with digitally enabled comparable sales up 20.5% [15][25] - Fresh sales increased mid to high single digits, with double-digit growth in meat categories [22][23] - Non-foods had comparable sales in the mid-single digits, with significant growth in categories like gold jewelry and health and beauty [23][24] Market Data and Key Metrics Changes - Traffic increased by 3.1% worldwide, and average transaction size rose by 3.2% [15] - The U.S. and Canada renewal rate was 92.2%, slightly down from the previous quarter, while the worldwide rate was 89.7% [17] - Digital engagement metrics showed website traffic up 24% and app traffic up 48% [25][77] Company Strategy and Development Direction - The company plans to open 30+ new warehouses annually in the future, with a total of 921 warehouses worldwide [5][6] - A focus on technology integration aims to enhance member experience and operational efficiency, including AI applications in inventory management [10][56] - The company is committed to maintaining competitive pricing while investing in technology and member services [34][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in consistent sales growth patterns despite some monthly fluctuations due to external factors [39] - The company is optimistic about future warehouse openings and market expansion, particularly in Europe and Asia [84] - Inflation trends remain stable, with mixed impacts across different product categories [27][28] Other Important Information - Capital expenditures for Q1 were approximately $1.53 billion, with an estimated total of $6.5 billion for the fiscal year [20][22] - The company reported record sales in various categories during the holiday season, indicating strong consumer demand [22][26] Q&A Session Summary Question: Observations on Costco's willingness to embrace technology - Management acknowledged a focus on technology and operational efficiency, emphasizing that maintaining low prices for members remains a priority [33][34] Question: Concerns about traffic and the need to invest in price - Management noted consistent member behavior and emphasized the importance of delivering value and quality to maintain membership growth [39][41] Question: Warehouse openings and membership strategies - Management indicated that upcoming openings will include a mix of infill and new market locations, with a focus on driving top-line sales [47][48] Question: Retail media and digital advertising opportunities - Management highlighted the potential of retail media as a growth area while ensuring that value for members remains the primary focus [51][52] Question: AI applications in business - Management expressed excitement about AI's potential to enhance procurement and supply chain efficiency, alongside improving member experiences [56][57] Question: SG&A leverage and productivity dynamics - Management discussed challenges in achieving SG&A leverage due to higher healthcare costs and investments in employee agreements, but noted positive productivity trends [92][93]

Financial Data and Key Metrics Changes - Net income for Q3 was $1.9 billion or $4.28 per diluted share, up more than 13% from $1.68 billion or $3.78 per diluted share in the same quarter last year [12][13] - Net sales for Q3 were $61.96 billion, an increase of 8% from $57.39 billion in the same quarter last year [14] - Membership fee income was $1.24 billion, an increase of $117 million or 10.4% year over year [17] Business Line Data and Key Metrics Changes - U.S. comparable sales were up 6.6% or 7.9% excluding gas deflation, while Canada comp sales were up 2.9% or 7.8% adjusted for gas deflation and FX [14] - E-commerce comp sales were up 14.8% or 15.7% adjusted for FX [15] - Fresh category comparable sales were up high single digits, led by double-digit growth in meat [28] Market Data and Key Metrics Changes - Traffic or shopping frequency increased 5.2% worldwide and 5.5% in the U.S. [15] - Average transaction or ticket was up 0.4% worldwide and up 1.1% in the U.S. [16] - Gas comps were negative low double digits during the quarter, driven by a lower average price per gallon [32] Company Strategy and Development Direction - The company plans to open another 10 warehouses during Q4, including locations in Sweden, Korea, and Canada, bringing the total warehouse count to 914 worldwide [5] - The focus on digital and technology is seen as crucial for future growth, with investments aimed at improving member experience [9][10] - The company is committed to providing quality items at the lowest possible prices, viewing price increases as a last resort [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to navigate challenges posed by tariffs and inflation, emphasizing the importance of maintaining competitive pricing [11][35] - The company noted that in uncertain times, its value proposition resonates strongly with members [11] - Management highlighted the importance of agility in sourcing and pricing strategies to mitigate tariff impacts [35] Other Important Information - Membership renewal rates were 92.7% in the U.S. and Canada, with a worldwide rate of 90.2% [18] - The company ended Q3 with 79.6 million paid household members, up 6.8% year over year [20] - Capital expenditure in Q3 was approximately $1.13 billion, with an estimated full-year CapEx of over $5 billion [28] Q&A Session Summary Question: What is Costco telling merchants regarding pricing strategy? - Management indicated that they are focused on lowering prices wherever possible and have seen improvements in the competitive landscape [41][43] Question: How are price gaps changing in the current inflationary environment? - Management noted that they are closely monitoring pricing and have been proactive in lowering prices as commodity costs decrease [46][48] Question: How should expectations be recalibrated as Costco laps outsized growth from precious metals and gift cards? - Management acknowledged that some deceleration in growth is expected but remains confident in the ability to find quality items at great value [55][61] Question: What is being done to improve member experience in high-volume warehouses? - Management emphasized strategic openings of new warehouses to alleviate congestion and improve member experience [62][65] Question: What is the outlook for LIFO charges in the coming quarters? - Management provided insights into the LIFO charge calculations and indicated that future charges will depend on inflation rates and tariff impacts [76][82]