PWW

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pww.comCostco Wholesale Corporation, Period Ending Jan 06, 2008 Sales- Trading Statement Call, Jan 10, 2008 - NasdaqGS:COST

NasdaqGS:COST

Bob Nelson [Executives] 💬

Bob Nelson, the Head of Finance and Investor Relations at Costco Wholesale Corporation, provided a detailed summary of the company's sales results for the five-week retail month of December, which ran from December 3rd to January 6th, 2008. Here is a detailed list of his comments:

General Overview

  • Period Covered: Five-week retail month of December (December 3rd to January 6th, 2008).
  • Comparison Period: Same five-week period in the previous year (December 4th, 2006 to January 7th, 2007).

Financial Results

  • Net Sales for December: $7.55 billion, an increase of 10% from $6.84 billion in the same period the previous year.
  • Net Sales for the First 18 Weeks of Fiscal Year 2008: $24.53 billion, an increase of 11% from $22.04 billion in the comparable period the previous year.

Comparable Sales Increases

  • Five-Week Retail Month of December:
    • U.S.: +5%
    • International: +16%
    • Total Company: +7%
  • First 18 Weeks of Fiscal Year 2008:
    • U.S.: +5%
    • International: +17%
    • Total Company: +8%

Regional and Merchandising Highlights

  • Strongest U.S. Regions: Southeast, Midwest, Northwest, and Texas.
  • Strongest International Markets (in local currencies): Korea, Taiwan, and Canada.
  • Foreign Currency Benefit: +225 basis points in December, down from +290 basis points in November.
  • Total International Comparable Sales: +5.5% in local currencies, resulting in a reported +16% in U.S. dollars.

Merchandising Category Performance

  • Food and Sundries:
    • Strength in deli, cooler, candy, and foods.
    • Negative comparable sales in tobacco due to a price increase last year.
  • Hard Lines:
    • Strength in sporting goods, automotive and tires, and majors (electronics, audio, video, computers, and white goods).
    • High single-digit comparable sales in TVs.
    • Approximately 20% increase in cameras and camcorders.
  • Soft Lines:
    • Strong in small appliances, media, and men’s and women’s apparel.
    • Softer sales in housewares and jewelry.
  • Fresh Foods:
    • Strong in produce and service deli.
  • Ancillary Business Sales:
    • Strong in gasoline stations, optical shops, and hearing aids.
    • Gasoline business benefited from inflationary environment (average price per gallon $2.94 vs. $2.31 last year).

Other Factors Affecting Sales

  • Weather Impact: Heavy snow in Eastern Canada and the Northeast, heavy rains, winds, and floods in California, negatively impacting sales by approximately -50 basis points.
  • Transaction and Traffic Counts:
    • Average transaction up less than +6%.
    • Traffic counts higher year-over-year by more than 1.5%.
  • Cannibalization: Negatively impacted the overall comparable sales by approximately -90 basis points.

January Sales Outlook

  • No significant holiday shifts or calendar anomalies expected.
  • 28 selling days in January, ending February 3rd.
  • Annual wallet coupon promotion began January 7th.
  • January sales results to be reported on February 7th.

Warehouse Operations

  • Current Number of Warehouses: 529 worldwide.

    • U.S. and Puerto Rico: 389
    • Canada: 75
    • UK: 19
    • Korea: 5
    • Japan: 6
    • Taiwan: 5
    • Mexico: 30

  • Planned Openings: 20 to 23 new warehouses, including 4 to 5 relocations, before the end of fiscal year 2008 (August 31, 2008).

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