Costco(US:COST)2025-09-29 03:06Summary of Costco Wholesale (COST) Conference Call Company Overview - Company: Costco Wholesale (COST) - Market Cap: $418.5 billion - Enterprise Value: $407.8 billion - Industry: Retail, Specialty Hardlines, Supermarkets, and Discount Stores Key Financial Results - F4Q EPS: $5.87, exceeding GS/consensus estimates of $5.85/$5.80 [19][20] - Total Company Same Store Sales (SSS): +6.4%, in line with consensus but below GS estimate of +7.1% [19][20] - Gross Margin: 11.1%, above GS/consensus of 11.0%/10.9% [19][20] - EBIT Margin: 3.9%, compared to GS/consensus at 4.1%/3.9% [19][20] Membership Growth - Total Paid Memberships: 81.0 million, with a 7% year-over-year increase in membership income [13] - Executive Memberships: 38.7 million, representing 47.7% of all members, up from 47.2% last quarter [13] - Incremental Sales from Extended Hours: Estimated to contribute an additional +1% to U.S. weekly sales [13] Sales Performance - Traffic Growth: +3.7% contributing to SSS growth [2] - Fresh Sales: Up high single digits, driven by double-digit growth in meat [2] - Non-Food Sales: Up high single digits, with notable growth in gold, jewelry, and toys [2] - Pharmacy, Optical, and Hearing Aids: Continued strong performance [2] E-commerce Trends - E-commerce Traffic Growth: +27%, with significant increases in categories like gold, jewelry, and housewares [14] - Delivery Improvements: New delivery experience led to a +13% increase in items delivered [14] - Personalized Offers: Launched on the COST homepage, resulting in a +22% increase in traffic to product detail pages [14] Inflation and Cost Management - Inflation Trends: Remains in the low single digits (LSD) to mid single digits (MSD) range [14] - LIFO Charge: $43 million due to inflation impacts [14] - Management Strategy: Focus on changing assortments to mitigate inflation impacts, emphasizing high-ticket categories [14] Future Outlook - 12-Month Price Target: Increased to $1,218 from $1,133, reflecting confidence in the company's value proposition [24] - EPS Estimates: Updated for FY26/27 to $19.68/$21.99, with a new FY28 estimate of $23.94 [22] Risks - Competitive Landscape: Risks from grocery, convenience, big-box, and e-commerce competitors [28] - Macroeconomic Factors: Potential headwinds from consumer demand and supply chain issues [28] Conclusion - Investment Rating: Reiterated Buy rating based on strong performance metrics and growth potential in membership and e-commerce [24]