Costco(US:COST)2025-09-25 22:02Financial Data and Key Metrics Changes - Net sales for Q4 were $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 prior year [12] - Membership fee income increased by $212 million or 14% year over year, reaching $1.72 billion [14] - Gross margin for Q4 was 11.13%, up 13 basis points year over year [17] - SG&A rate increased to 9.21%, up 17 basis points from 9.04% last year [18] Business Line Data and Key Metrics Changes - E-commerce sales exceeded $19.6 billion, increasing over 15% year over year [7] - Comparable sales were up 5.7%, or 6.4% adjusted for gas deflation and foreign exchange [12] - E-commerce comparable sales were up 13.6%, or 13.5% adjusted for foreign exchange [13] - Fresh sales were up high single digits, with double-digit growth in meat [22] - Non-foods had comparable sales in the high single digits, with strong performance in gold and jewelry, gift cards, and consumer electronics [23] Market Data and Key Metrics Changes - The company opened 10 new warehouses in Q4, bringing the total to 914 worldwide [5] - Plans to open another 35 warehouses in fiscal year 2026, including five relocations [5] - Total paid members reached 81 million, up 6.3% year over year, with 38.7 million paid executive memberships, up 9.3% [15] Company Strategy and Development Direction - The company aims to grow market share by delivering high-quality items at the best value [11] - Continued focus on expanding Kirkland Signature product sourcing to lower costs and reduce emissions [8] - Investments in technology and enhanced checkout processes to improve member experience [9] - Emphasis on digital strategy to enhance member engagement and e-commerce capabilities [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in growth despite macroeconomic uncertainties [11] - The company is adapting to changes in membership dynamics, particularly with younger members [41] - Management noted the importance of improving renewal rates for online sign-ups [42] Other Important Information - Capital expenditure in Q4 was approximately $1.97 billion, with a total of under $5.5 billion for the full year [20] - The company is focusing on mitigating tariff impacts and increasing domestic sourcing [26] - Inflation remained in the low to mid-single digit range, with varying impacts across categories [25] Q&A Session Summary Question: Awareness of extended member hours and potential comp lift - Management communicated effectively about extended hours, resulting in a 1% comp lift, with ongoing efforts to inform members [32][33][34] Question: Expected decline in membership renewal rates - Management acknowledged a potential decline in renewal rates due to increased online sign-ups but emphasized overall membership growth and engagement [38][39][41] Question: Insights on core margins and price increases - Core margins improved by 29 basis points, with effective management of tariffs and supply chain efficiencies contributing to this outcome [45][46][47] Question: Sustainability of membership fee income growth - Management remains optimistic about continued membership growth driven by new warehouse openings and younger member engagement [55][56] Question: E-commerce and grocery demand in light of competition - Management noted strong growth in Instacart-driven traffic and remains aware of competition, focusing on delivering desired products to consumers [65][66][67] Question: Future capital expenditure plans - Management indicated that capital expenditure would likely grow in 2026, focusing on warehouse openings, remodels, and technology investments [74][76]