Costco(COST)2025-05-29 22:00Financial Data and Key Metrics Changes - Net income for Q3 was 4.28 per diluted share, up more than 13% from 3.78 per diluted share in the same quarter last year [12][13] - Net sales for Q3 were 57.39 billion in the same quarter last year [14] - Membership fee income was 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 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]