COSTCO WHOLESALE CORP /NEW Q1 FY2025 earnings call

• Warehouse openings: Opened 7 new warehouses in Q1, including 1 relocation, resulting in 6 net new buildings (4 outside US). Project 29 openings in fiscal 2025 (3 relocations, 26 net new, 10 outside US). • Business highlights: US bakery sold 4.2M pies before Thanksgiving; food courts sold 274k pizzas on Halloween (+21%); pharmacy prescription growth >19%; e-commerce deliveries by Costco Logistics: nearly 1M in Q1, over 196k last week. • Financial results: Net income $1.798B ($4.04/diluted share), up from $1.589B ($3.58/diluted share) last year. Membership members: 77.4M paid, 138.8M cardholders, 36.4M executive members (46.8% of paid, 73.1% of sales).

Net sales for the first quarter were $60.99 billion, an increase of 7.5% from the prior year. US comparable sales were up 5.2% (7.2% excluding gas deflation), Canada comp sales up 5.8% (6.7% adjusted for gas deflation and FX), other international comp sales up 4.7% (7.1% adjusted). Total company comp sales were up 5.2% (7.1% adjusted for gas deflation and FX), and e-commerce comp sales were up 13% (13.2% adjusted for FX). Membership fee income was $1.166 billion, an increase of $84 million or 7.8% year over year. Gross margin reported rate was 11.28% in Q1, higher by 24 basis points year over year. SG&A reported rate was 9.59% in Q1, higher by 14 basis points year over year.

• Project 29 warehouse openings in fiscal 2025 (3 relocations, 26 net new, 10 outside US). • Continue to monitor and adapt to potential port strikes in India, East Coast, Canada. • Will announce December sales results on Jan 8 after market close.

• Foreign exchange and gas price deflation impacts on sales. • Volatility in gas margins due to geopolitical events. • Potential impact of port strikes on inventory and stock availability. • Mix shift in membership renewals affecting reported renewal rates.

Q: Competitive impact and Scan and Go?

A: Gary and Ron discussed competitive incrementality from new warehouses and focus on self-checkout instead of Scan and Go.

Q: Private label expansion and margin?

A: Ron and Gary talked about private label expansion and how it drives traffic without significant margin offset.

Q: Wallet share and 2% rebate?

A: Ron discussed earning wallet share with affluent shoppers, and Gary explained 2% rebate true-up.

Q: Instacart/Uber partnerships and digital business?

A: Ron and Gary talked about strong partnerships, growth pace, and how they enhance digital business.

Q: Labor relations with Teamsters?

A: Ron stated Costco's focus on fair labor relations with Teamsters.

Q: Digital business online presence and member sign-ups?

A: Gary and Ron discussed ongoing improvements in digital presence and impact of online member sign-ups on renewal rates