Ladies and gentlemen, thank you for standing by, and welcome to the CODCO Q4 Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer I would now like to hand the conference over to Richard Galante. Please go ahead.
Thank you, Lori, and good afternoon to everyone. I will start by stating that these discussions will include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause actual events, results and or performance to differ materially from those indicated by such statements. The risks and uncertainties include, but are not limited to, those outlined in today's call as well as other risks identified from time to time in the company's public statements and reports filed with the SEC. Forward looking statements speak only as of the date they are made and the company does not undertake to update these statements except as required by law.
In today's press release, we reported operating results for the Q4 fiscal year 2020, the 16 52 weeks ended August 30. Reported net income for the Q4 came in at $1,389,000,000 or $3.13 per diluted share compared to $1,090,000,000 or $2.47 per diluted share last year in Q4. This year's Q4 was negatively impacted by incremental expense related to COVID-nineteen premium wages and sanitation costs totaling $281,000,000 pre tax or $0.47 a share, as well as a $36,000,000 pre tax charge or $0.06 per share related to early payment of $1,500,000,000 of debt. These items were partially offset by an $84,000,000 pre tax benefit of $0.15 a share for the partial reversal of a reserve of $123,000,000 pre tax, dollars 0.22 per diluted share related to our product tax assessment taken in the Q4 of last year. Net sales for the quarter increased 12.5 percent to $52,280,000,000 up from $46,450,000,000 in the Q4 a year earlier.
For the fiscal year in its entirety, fiscal 2020 came in at $163,220,000,000 a 9.3% increase over the $149,350,000,000 in fiscal 2019. Comparable sales for the Q4 of fiscal 2020 were as follows. On a reported basis for the 16 weeks, U. S. Was 11%, excluding gas deflation and FX, U.
S. Was 13.6%. Canada reported 9.1% up, again ex gas deflation and FX 12.6 percent up. Other international reported 16.1%, ex gas deflation and FX 18.8%, bringing the total company to a reported number of 11.4% comp and again ex gas deflation and FX up 14.1%. For the company, e commerce reported was 90.6% up and ex gas and FX, 94.3 percent up.
In terms of the 4th quarter comp sales metrics, foreign currencies relative to the U. S. Dollar negatively impact sales by about 50 basis points and gasoline price deflation negatively impacted sales approximately 220 basis points. Traffic or shopping frequency on a worldwide basis was down 1.2% during the 4th quarter and showed an increase of 1.2% in the U. S.
Our average transaction or average basket size was up 12.7% during the 4th quarter, notwithstanding the negative impacts from gas deflation and FX which were included in that number. We've kept you up to date in our monthly sales calls on the impacts from pandemic from the pandemic as we've been able to identify those. Overall merchandise sales in the core, core being food and sundries, hard lines, soft lines and fresh, as well as pharmacy have all been strong, while sales in our ancillary, other ancillary and travel businesses though now open have been soft. Next, moving down the income statement, membership fee income, we reported 4th quarter fee income of $1,106,000,000 up $56,000,000 from 1.05 $1,000,000,000 in the Q4 of 'nineteen. The $56,000,000 increase ex FX would have been 60,000,000 up.
During the quarter, we opened 8 net new units and 13 for the entire fiscal year. In terms of renewal rates, at 4th quarter end, our U. S. And Canada renewal rate remained at 91.0% and worldwide rate also remained at its similar number from a quarter ago at 88.4%. In terms of the number of members at Q4 end, both member households and cardholders, Total paid households at 4th quarter end came in at $58,100,000 and cardholders 105 point $5,000,000 In the Q4, we standardized the membership count methodology globally, which we apparently done differently in different markets, North America versus others.
And so that increase includes that slight adjustment. The change resulted in adding approximately 1,300,000 paid members and 2,000,000 cardholders to our member base. So as an example, from Q3 to Q4, when we showed going $55,800,000 to $58,100,000 or up $2,300,000 that $2,300,000 increase includes the $1,300,000 adjustment upwards. Similarly, the $3,700,000 increase from the end of Q3 to Q4, that $3,700,000 increase includes $2,000,000 of an adjustment. I'd like to note however that neither the membership fee income dollars nor the renewal rate calculations were affected by this adjustment.
At 4th quarter end, paid executive memberships totaled 22,600,000 an increase of 765,000 during the 16 weeks since Q3 end. Going down to the gross margin line, our reported gross margin came in at 11.24%, up 18 basis points from last year's Q4 gross margin of 11.06%. That 18 basis point increase, excluding gas deflation, came in would have been minus 4 basis points and excluding a portion of the direct COVID expenses would have been up 8%. And I'll show you that in the numbers that I asked you to jot down here. If you jot down the following numbers, 2 columns, 1st column will be 4th quarter as reported, 2nd column will be 4th quarter ex gas deflation.
The first line item would be core merchandise. Year over year on a reported basis, core merchandise was up 101 basis points, ex gas deflation up 82 basis points, so plus 101 and +82 in the first line item. Ancillary businesses being the 2nd line item, reported minus 66 basis points and without gas deflation minus 71. 2% reward minus 4 and minus 2 basis points, other minus 13 and minus 13 basis points and that would give you totals on a reported basis of plus 18 basis points, which I mentioned, and ex gas deflation to minus 4. Now the core merchandise component of gross margin again was higher by 101 basis points year over year 82 basis points higher ex gas deflation.
Similar to last quarter and even more dramatic of an impact during this quarter, we had a significant sales shift from ancillary and other businesses to the core. This resulted in a higher contribution of our total gross margin dollars coming from the core operations versus last year. Looking at the core merchandise categories in relation only to only their own sales, so core on core if you will, margins year over year were up by 70 basis points. Fresh foods was the biggest driver of the year. With the strong sales in fresh, we benefited from efficiency gains in both labor productivity and significantly lower what we call D and D or damaged and destroyed or product spoilage.
Food and sundries, softlines, hardlines as well as I mentioned fresh foods already, but in addition food and sundries, softlines and hardlines all had higher margins year over year in the quarter as well. Ancillary and other businesses gross margin again was lower by 66 basis points and 71 basis points ex gas deflation. Most of our ancillary businesses were lower year over year with significant negative impact coming from gasoline and travel, which accounted for about 3 quarters of the decline. Costco Logistics, which was primarily our acquisition this past March of the big and bulk year last mile carrier called Inoval, that was our newly acquired business. That impact we anticipated losses in this business as it ramps up.
Note that these losses do not take into account any added sales from expanded product offerings, lower delivered prices and improved member satisfaction. Next, 2% reward, nothing really to say there, minus 2 basis points ex gas deflation. And other, the minus 13 basis points, nearly all of this is attributable to the cost from COVID, $64,000,000 of the $281,000,000 previously mentioned. These are direct costs for incremental wages and sanitation allocated to our cost departments to our merchandise fulfillment operations. So, it impacts cost of sales.
Moving to SG and A, our reported SG and A percentage year over year was lower or better by 47 basis points coming in at 9.62% of sales this year in the 4th quarter versus 10.09% last year in the 4th quarter. Ex gas deflation, SG and A was lower or better by 66 basis points. Again, if you jot down the following two columns of numbers, 1st column is reported year over year SG and A change and the second column would be ex gas deflation. Core operations as reported were better or lower by 42 basis points and ex gas deflation lower or better by 57 basis points, so plus 42 and plus 57, central plus 1 and plus 3, stock compensation plus 3 and plus 4, other plus 1 and plus 2 and that gives you the total on a reported basis SG and A being better by 47 basis points and ex gas deflation being better by 66. SG and A in the core excluding COVID related expenses, which I'll discuss in a moment, was significantly leveraged of course with a strong core merchandise sales increases.
As I mentioned, central stock compensation showing small improvements year over year as a percent of sales. And now the other plus 1 basis point reported in a plus 2x gas deflation. As I discussed earlier in the call, the quarter was positively impacted by an $84,000,000 reversal of last year's Q4 $123,000,000 pretax reserve related to a product tax assessment taken a year ago in Q4. The net impact from this item was plus 43 basis points. That plus 43 basis points is in this plus 1 and plus 2 basis point number.
Also included in other are the incremental COVID costs or $217,000,000 of the $281,000,000 total amount that equates to 42 or 41 basis points without gas deflation offsetting it the other way. So that's why you have that very small number in that line. Again, these are the costs for incremental wages and safety and sanitation. Next on the income statement, pre opening expense. Pre opening expense last year in Q4 was $41,000,000 This year in the 4th quarter was $15,000,000 less coming in at $26,000,000 Last year in the 4th quarter, we had 12 gross openings, 10 net and 2 relos and that compares to 10 openings gross or 8 net in the Q4 of this year.
The big difference in those two numbers, this year's Q4 re hedged primarily to warehouses opened during the quarter as well as warehouses scheduled to open in the Q1. Last year's preopening included $12,000,000 in preopening expenses related to our new our then new poultry complex. All told, reported operating income in Q4 increased 32% coming in at 1.920 $9,000,000,000 this year compared to $1,463,000,000 last year and it would be a slightly higher percent increase if you excluded the items that I had mentioned. Below the operating income line, interest expense was higher year over year by 6,000,000 dollars coming in at $51,000,000 this year compared to $45,000,000 last year. Interest income and other for the quarter was lower by $83,000,000 year over year.
As discussed earlier, following the completion of the debt offering, we prepaid $1,500,000,000 of debt during the quarter. There was a pre tax expense of or what's known as a make whole payment of $36,000,000 related to the early retirement of that debt. That's in this interest income and other line. Actual interest income was lower by $28,000,000 lower it was actually lower by $28,000,000 year over year in the quarter due principally to lower interest rates being realized. And lastly, FX and other was lower by $19,000,000 Overall reported pretax income in the 4th quarter was up came in higher by 25% coming in at $1,869,000,000 this year compared to $1,492,000,000 last year.
Again, these exclude those items I point that's including those items I pointed out earlier. In terms of the income tax rate, our tax rate in Q4 of 2020 was 24.9%, a little lower than a year ago when it was at 25.7% in the Q4 a year ago, so a little benefit there. A few other items of note, in terms of warehouse expansion, with COVID, we had some delays in some of the planned openings for the fiscal year that just ended this past August 30 and few of those have been pushed into this year that we're in now. For the year, we opened 16 total units including 3 relos. So last year, we opened a net increase of 13 locations.
Our plans for this year is to open about 20 net, 23 including 3 relos. That's our best guess and plan at this point. And as of Q4 end, our total warehouse square footage stood at 116,000,000 square feet. In terms of capital expenditures, for the 16 week Q4, we spent approximately $852,000,000 and the full year we spent $2,800,000,000 Our estimated CapEx for all of fiscal 2021 is in the $3,000,000,000 to $3,200,000,000 range. E commerce, overall our e commerce sales as you've seen each month have increased nicely.
For the Q4 on a reported basis up 90.6% and ex FX 91.3% increase during the Q4. A few of the stronger departments, there are several health and beauty aids, food and sundries, appliances, TVs, computers and tablets, housewares and small electrics. Total online grocery grew a very strong rate in Q4, several 100%. This e commerce comp, if you will, the numbers the e commerce numbers I just mentioned above follow our usual convention, which we exclude the 3rd party same day grocery program. If we included that 3rd party same day, our e commerce comps result would have been approximately 120% up during the quarter.
Overall, our e com sites were relatively smoothly during the quarter despite the dramatic volume increases and we were able to improve our delivery times delivery times throughout the quarter as we adjusted to the ramped up order volumes. Now quickly turning to COVID and the coronavirus and some of the issues and impacts surrounding it. From a sales perspective, as indicated by our past 3 monthly sales releases, we've enjoyed strong sales results during the June, July August timeframe. Certainly, the sales strength starts with our being deemed essential, resulting in strong sales of fresh foods and foods and sundries and health and beauty aids and the like. We've also benefited from the much improved sales and products and items for the home outside of the food area.
As people are spending less on travel, air and hotel and dining out, they seem to have redirected some of those dollars to categories like lawn and garden, furniture and mattresses, exercise equipment, bicycles, housewares, cookware, domestic and the like. And lastly, a few of our ancillary businesses, notably our optical and hearing aid operations were closed for 12 to 16 weeks and reopened during the mid summer. From a supply chain perspective, kind of a 40,000 foot view, in terms of China, at least judging by the shipments to us, most of the factories are up and It is getting better and improving each week. And like us, we feel that our suppliers' factories have gotten a bit better over the last several months of instituting safety protocols. That's our best guess.
India in terms of getting back to normal each week is showing improvement and catching up, still a little behind. Food and sundries, some limits on paper goods, but getting better. Toughest area overall is still sanitizing wipes as well as latex gloves. In terms of other PP and E, we're in pretty good shape selling quite a bit of masks and the like. Milk and butter, things like that are generally okay.
In terms of fresh foods, proteins are currently all pretty good. There had been some slowdowns over the past few months and some allocations and some limits that we had to put on some sales of those items, but that's gotten back to normal at this point. Seafood and produce, all good as it has generally been throughout. In terms of holiday merchandise planning, Halloween, a few some small reduction in the amount of costumes, some more basic candy items, as well as for Christmas going a little more basic in some areas and as well as looking at things and needs and uses for the house. But viewing it given our strength of late relatively optimistically.
And Costco travel has shown some very modest improvement, but still significantly impacted during the quarter due to reduced demand. We do see our members starting to book travel again, although generally further out than we have historically seen. Our warehouses overall have remained open and are back to regular hours with additional hour on certain weekday mornings in many markets for seniors and persons with disabilities. The warehouses are still of course following the social distancing and sanitization guidelines and since May 4, as you know, we've required all members and employees in the warehouse to wear masks. Finally, in terms of upcoming releases, we will announce our September sales results, which is for the 5 weeks ending Sunday, October 4th, on that following Wednesday, October 7th after market closed.
With that, I will open it up to Q and A and give it back to Laurie. Thank you.
And your first question is from Simeon Gutman from Morgan Stanley. Your line is open.
Hi, everyone. Hey, Richard. My first question is how should we think about or how are you planning COVID costs for Q1 of the next fiscal year? And if I'm not mistaken, I thought that for this Q4, there was a range, I don't know if there was a range, but we were expecting them to be lower sequentially and I think they were pretty similar. So you mentioned the basics what it constituted, but can you talk about why?
Sure. As you may recall, on our Q1 conference call, we indicated that such types of cost in the Q4 would be at least $100,000,000 or over $100,000,000 And of course, 281 is over $100,000,000 but quite a bit larger. But the reality is the biggest factor is we chose to continue at least for the time being the $2 an hour premium. That represents about $14,000,000 a week. To date, we are doing that and we've committed to doing that at least through, I believe, the 1st 8 weeks of fiscal of this fiscal quarter.
And again, we'll take that time and again. Our numbers have been very good. Our employees are on the front line. And so that mind you, the 4th quarter was a 16 week quarter versus Q3 which is a 12 week quarter. So on a per week basis it's come down.
There's other things that have been that won't be repeated in the Q1 at least. If you go back to the very beginning of time for the 1st 4 to 5 weeks when we stopped doing food samples, we employed those 3rd party employees ourselves. We paid our 3rd party to have them help us in the warehouse. That was during those 3 to 4 weeks of craziness in late February through mid to late March when people were coming in and hoarding and what have you and that helped quite a bit. So there's some costs that I don't expect to be continued.
The biggest component of course would be the $2 premium and we'll see. At this juncture, we've committed to it to our employees for the 1st 8 weeks of this quarter.
Okay. Thanks for that. My follow-up, as you mentioned the holiday and I think you said you're looking at it optimistically or favorable for now. Can you talk about maybe a little more detail why? It seems like the results speak for themselves for now, but there could be a lot of change over the next couple of months.
And has your customer diversified their basket with you and you think you'll be able to retain them across more categories and keep trips as more retail gets their traffic back? Thanks.
Sure. Well, look, I mean, the main data points that we look at is how strong things have been in the last 3.5, 4 months. June, July August sales results, which we've all shared with you guys, the trend in traffic has improved. So it's been positive the last couple of months instead of slightly or even more than slightly negative going back to April May. While the average ticket or average basket sizes continue to be relatively strong.
So and probably if you ask what are the what's some of the biggest surprises that we've that we had looking at the last 3 months of sales results compared to what we had expected a few months before that. I mean the big surprise is, as we expected fresh and food and sundries and paper goods and the like and health and beauty aids to be strong, particularly food because of the weakness people dining out. But I think we're a little surprised by the strength in many of these discretionary non food categories, things for the house and big ticket items. Again, not only furniture for the inside the house, but patio furniture, live goods were particularly strong. In some instances, we had tried to cut back a few orders back in March April for seasonal summer goods like patio furniture.
Very quickly, we were having to scramble for more of those. And so, so far so good. We recognize that people are coming into Costco. We believe they feel safe given the safety protocols, the mask requirements, the sheer size of the building itself and the width of the aisles. So all those things have helped us in that regard.
We're also back to after a couple of months of not having our traditional multi vendor mailer coupon type of offerings because several key items were limited on allocation. We've gotten back to that. And so I think our at least our most recent 3 plus month history has given us some comfort at this point. Now as soon as I say that things may change, but at this juncture we feel very good about how it will be what it looks like going forward recognizing looking at some of these things with a more basic in terms of Halloween and Christmas and the like.
Your next question is from Chris Harbors from JPMorgan. Your line is open.
Thanks. Good evening, guys. So my first question is, what's driving that strong core on core margin outside of the fresh category, which clearly would benefit from a shrink perspective? Is it sell through and low clearance that mix within the categories? Or is it something else?
Well, on fresh, it's all of the above. I mean, it's strong sales on a relatively higher initial margin business within our small confines of margin range. But then two components of cost of sales in fresh is labor productivity and spoilage. We don't have spoilage. We sell out not literally, but almost literally to the piece on these end things.
And so you're not throwing stuff away. You're not there's it's a great business from a gross margin dollar perspective given the sales strength in it. So that's clearly the biggest thing. But again, if you look at the other three core areas, core on core food and sundries, hard lines and soft lines, they're all up, but up a nice amount, but nothing like fresh foods. So that's helped.
Now mind you, other things have offset that and the sum of all those things is still a positive. The things that have offset it would be things like the fact that certain ancillary businesses which are higher margin businesses were closed for a 12 to 16 week period. Our food court, of course, has been limited of what we do there. We took out all the tables. We've limited the product offerings.
Travel, which is while small business is an extreme example of high margin, many items in travel is just a brokerage fee, almost sales minus no cost of sales equal gross margin, if you will, is the markup or the commission on some of that stuff a portion of that. So those things have come down, but the sum of all those negatives are outweighed by the overall strength in core merchandise sales as well and pharmacy. Pharmacy has been relatively strong too. And within that fresh has been the biggest driver of it.
Got it. So a follow-up question. You were surprised by the negative gas impact in ancillary. I mean, your peers will not the same quarter, so tailwinds for the periods that crossed over. And so can you talk about how much of that 66 basis points is specifically gas versus the other businesses?
And as you look forward, considering that optical is open and food courts, at least with a smaller menu open and starting to see some traction around travel and gas prices being stable. Do you expect that at this point that that ancillary headwind could abate?
I think it will be less negative, but I think it's going to be around for a while. I mean, if you look at gas, gas is more profitable per dollar per gallon of sales than it was a couple of years ago, because I think if prices have come down, traditional retail has not been as competitive, which allows us to be more competitive, but still make a little more. And our trough at the lowest point, I'm guessing back in April or May, there was a week where our gallons were down close to half. Today, they're down closer to maybe down 10%, maybe 5% to 15% depending on the day or the week. But in normal times for the last few years pre COVID when the U.
S. Gasoline industry had comps in the very low single digits, we'd be in the very, very high single digits or close to 10 or 11 even sometimes. So we've so things have changed there. It's still a profitable business. And but when your sales when your price per gallon goes down 20%, 30% and your gallons are down even some small amount and it's a 10 plus percent of sales of our business, it has that effect on it.
At the end of the day, the sum of all this has still been quite good for us.
And could you break out the 66% that's specifically related to gas?
No. When we said 3 quarters of it was gas and travel. That's as good as we get here. I don't have the detail in front of me. My guess is gas is more of it than travel, but
they're both impactful. Your guess is better than mine. Thanks very much.
And your next question is from Chuck Grom from Gordon Haskett. Your line is open.
Hey, good afternoon. Curious, Richard, how you're thinking about the recovery of your gasoline business, particularly from gallons perspective? And I guess how this interplay is holding back for traffic into your storage, clearly getting better, but being impacted a little bit by the gas business?
Well, I don't know exactly. I haven't seen numbers in the last week or 2, but I believe our call it 10% negative gallon comp is still way better than the U. S. As a whole the U. S.
Gallon gasoline industry as a whole. And so but we'd rather have plus 10% to minus 10%. The fact is that people are coming in less, but they're buying more each time. And some of those two things as we've shown, we used to enjoy 5% to 8% comps pre COVID on a regular basis. And the last 3 months we've enjoyed 14s if you will.
And so overall, we'll take that. But it's got to be a small impact still.
Okay. And then just to spin a lot since I asked you, but the crossover between customers that purchase gas and then shop in the store on like times hours. Do you have that number handy?
I haven't seen it lately, but historically it had been during the hours that the warehouse itself is open because the gas station is open a couple of hours perhaps on either side of that.
It's in
the low-50s.
Low-50s. Okay, great.
And then
just switching gears a little bit on capital allocation, you ended the year with over $30 per share in cash and cash equivalents and you obviously remain significantly under levered. Curious how you and the Board are approaching this high cost problem?
Well, we have our regular quarterly Board meeting in a couple of weeks. We'll see. But at the end of the day, we talked about it every Board meeting all the different existing debt. The fact was is that we were planning for a worst case scenario where we would need more there'd be a slew of seasonal summer merchandise that we might have to hold for a year as well as there'd be a lower inventory turn particularly on discretionary non food categories. Up until June when we've seen the numbers really go in the northern way June, July August much of that need has not occurred.
So yes, we are in a good position right now. We'll continue to look at it. But you'll know us after we know.
Got it. Thanks a lot.
Your next question is from Karen Short of Barclays. Your line is open.
Hi, thanks very much. I guess first question just on the $2 premium. I guess the real question is, I mean, I know you called out the 8 weeks, but would it be more prudent as we kind of model this to just kind of think that's more or less the new norm, meaning $14,000,000 a week is kind of what we should add on, on an ongoing basis. It just seems that it's hard to take something like that away once you've offered it. So just thoughts on that.
I don't think it's completely hard to take away. We communicate via our CEO and our Head of HR to our employees. We've done that and we've continued to extend it but saying this will be it and we've added a little more. Well, I think we'll see. I think something will I think it may be hard but not impossible and we want to make sure we communicate to our employees of why we're doing it and we'll have to wait we'll just have to wait and see Karen.
Okay.
And then I wanted to just
I wouldn't necessarily budget it in for the full fiscal year, but we don't know at this point.
Okay.
We know it's at least 8 of the 12 weeks in Q1 and maybe more.
Okay. And then just back to traffic for a second. So within your reported traffic numbers is obviously ecom, right? So I wanted to just ask a little about what your physical in store traffic looks like? And then I think on the last call, you were asked on color on traffic with your more loyal executive members versus the lower level members.
Do you have any color on both of those?
I'm looking real quick. I really I don't have color in terms of generally, I mean, executive members do everything, spend more, come in more frequently, buy mortgage time and renew at a higher rate. I'm looking real quick here. Hold on. Traffic, I should call that.
I don't have traffic. Comps within our comp number, e commerce benefits it by a little over 3%. Of the comp. Of the comp. Of the traffic.
Yes, not the traffic number.
Okay.
And the average ring has more than doubled.
The average ring on ecom is
I'm sorry, the average ring on ecom versus the warehouse is about twice. And that's because you got a lot of you still even though we've expanded on food and sundries and apparel, you still got big ticket items like electronics and furniture, exercise equipment and the like.
Yes, the traffic is something like 1
2. Bob here is saying he's guessing that the traffic impact would be 1 to 2, but we don't have that broken out.
And your next question is from Michael Hunter from Iluvia. Your line is open.
Thanks a lot for taking my question. So Richard, now that we're 6 months into the pandemic, does Costco come out of the situation in better position to experience incremental margin expansion over time? And is there any factors that you've learned that would allow the company to generate more margin expansion than it would have otherwise?
Well, the more margin we can generate, the more likely we're going to give some of it back. In this case, arguably given our strength, we've certainly given it back. We remain very competitive, but we've also maintained that $2 premium to our employees, which we appreciate. I think the first part of your question when you started asking about how do we feel we're going to come out of the pandemic and as things change. I mean, look, there's factors as people eat out more and go out more or travel more, there's less for the home.
That's on a macro basis. We have to believe here and we do believe that we have picked up new members. We've picked up sales from existing members from categories that they are buying more at Costco now relatively speaking in part because certain other venues or traditional venues are either closed or not frequently not frequent as often. So again, we've been blessed in that regard. I think the other thing that I've witnessed over the last several months is our merchants' ability to pivot and to add items for the houseware items, additional items.
And so I think net of all those things, I still think on a macro basis when people start eating out more and start flying more and attending going on vacations, some of these monies that are now being used for purchasing things for the home is going to move that way. That being said, I think there's several areas where we've we're retaining more of their dollars and some portion of that will continue to retain when it gets back to normal.
Okay. And on an unrelated note, with e commerce growth, what percentage of your membership is currently buying from you online? What's the profile of the member who's driving the growth? And presumably, a lot of the spend is incremental because the spend of those members is going up. So does that change how you are thinking about emphasizing or investing behind your e commerce business?
Yes. I don't have all those specifics. What I know is what was happening even before COVID and has been exacerbated in a positive way since COVID is more some members have signed up to utilize those services. More members are utilizing those services and spending more on it. If you think about the one day fresh, it is up several 100 percent fold recognizing it was a smaller base.
Even as it's gone down from its peak a couple of 3 months ago, it's still a lot higher than it was before. And my guess is even as people get used to wanting to go out, there's some people right now that aren't going to the supermarket or aren't going out to shop or to Costco to shop. They love this service. There's some people that are going to there's going to be some group of people who are going to like that. And given our quality and value, we at the supermarket are not mutually exclusive of one another and we think we'll keep some of that.
So we are certainly doing more to market to members not only in store promotions, but online promotions as well. You feel better about offering anything. Yes. We feel I feel better about our offerings today certainly than a year ago or 2 years ago, recognizing there's a lot of low hanging fruit because of some of the things we hadn't done historically. We know that on the I'll hate to use the phrase again, but on the big and bulky side, a lot of those things for 4 years we had talked which is pre COVID, we had talked about going from $50,000,000 in white goods sales in store in the U.
S. With a limited sales penetration if you will to fiscal 2019 doing almost $700,000,000 I think just under $700,000,000 That business has increased at a more rapid pace in the last year for two reasons COVID and people buying things for the home as well as in our view the original things we're seeing trends wise in terms of how to utilize better utilize our big and bulky Intervale acquisition what we call now what we now call cost of logistics for big ticket furniture items, lawn and garden items, exercise equipment and the like.
Your next question is from Paul Lejuez of Citi. Your line is open.
Hey, guys. Paul Lejuez. Richard, can you maybe talk about what you're seeing in terms of spending by new customers relative to existing customers, but also relative to what you would typically see from a new customer? And then second, I guess I'm curious if you have looked at club usage by members at all. What percent of your members use the club this quarter versus last quarter anyway to frame that?
Thanks.
I don't know if I can answer all those specifically, but keep in mind some of our new members signed up simply for same day fresh or 2 day dry. Same day fresh, you have to be within a market a trade area where there's a Costco. 2 day dry, you can be anywhere I think almost anywhere in the United States. And with Instacart, it's both United States and a good part of Canada now. And so we have some members if they weren't a member, but they're signing up just to get 2 Day Dry and they're not near a Costco, Needless to say, they're just buying those types of basic dry grocery items and that's it.
Generally speaking, what we've seen in any given member, whatever type of member, they buy more each year over the 1st few years of their membership. And then there's the age thing as well. The sweet spot for us is still 40 to 55 year olds as they've grown economically, grown family wise and are not on the downside of that curve in terms of empty nesting or what have you. But I don't have any specifics beyond that to give you.
How about club usage?
Club usage? Same thing. Again, I can tell you, I don't have anything specific in the last few months, but club other than traffic has improved greatly from its trough 5 months ago, not back to where it was pre COVID. But one of the things that we see is that the typical member over the 1st 3 to 5 years is growing their total purchases, which is a combination of their basket and their frequency. And clearly, when we can convert somebody to an executive member, they are buying more and shopping more frequently than that.
Got it. Thank you. Good luck.
Your next question is from Oliver Chen of Cowen. Your line is open.
Hi, thank you. Richard, on the e commerce frontier, it's been really impressive what you've done. What is some of the lower hanging fruit that you see ahead there? And also if you could brief us on the penetration now and how you might see that step change and where that will head in the future?
Well, I mean the main lower penetration things are if you go back 3 or 4 years ago, I don't think we had good e mail addresses for much more than a third of our member base. We didn't focus on that kind of stuff. Today, we have well over 60% and growing. We now require you when you sign up and more members are signing up online than in store in general anyway. When you sign up, you sign up with an e mail address.
So we're doing a lot more to collect and gather those e mail addresses and then communicating with them more often. So that's probably the single biggest low hanging fruit. The other thing is, is we feel that we've been able to use e mails, if you will, not only to drive e commerce special promotions, but also in store special promotions. As well, the COVID, we were pleasantly surprised by just the sheer increase and people using same day fresh. Anecdotally, I can't tell you how many people have mentioned to me how they love it.
And they may very well be shopping same day fresh or same day whatever from their local supermarket as well. But we've got a lot of great items on there and
it's hitting a chord. And Richard, as we look to this holiday season, which is definitely like no other, what factors would you prioritize as how you're planning it as best you can differently this year versus others? And is the multi vendor mailer in good shape? And are you going to leverage that a lot for holiday as well? Would love thoughts around dynamics of supply chain and marketing for Holiday?
Well, the multi vendor mailer is back and there may be a few items that we don't have because of certain supply limitations. But for the most part, it's completely back after I think 2 or 3 of those 6 or 9 weeks of multi vendor mailers if you will that we didn't do. I think the biggest difference is again for the Christmas holidays is getting back to basics, But you're still going to see some hot exciting items at Costco. Again, as I mentioned even on Halloween, we still have costumes. I think we brought in something like 80% of what we would have normally brought in, 80% or 90% and we're actually selling them.
So We added some vendors over the last several months given certain shortages. One of the challenges is right now we've had great numbers in electronics and white goods, notwithstanding the fact that the numbers would be better if there was greater supply. We all read about there are certain supply issues on laptops and computers and things like that on some of the gaming things. On some of the white goods where there might be downstream shortage or at least some allocation of compressors. So we're doing very well on that.
We've added some different vendors in some cases. And I think the fact that we did so well this summer relative to what we had anticipated has given us the confidence to be still pretty aggressive going into the fall.
Our last question on same day fresh and the momentum there. What are the margins like and what are your thoughts about that margin and the take rate and also taking some of those capabilities in house versus using the white label?
Well, at this juncture, we have a very good relationship with other competitors, I'm sure having a good relationship also with Instacart. There's a few other smaller ones that we're using. We're not necessarily looking to take that in house at this juncture. But we are always looking at various third parties and we have good existing relationships and we want to keep growing those as well.
Thank you. Best regards. Thanks.
Your next question is from John Heinbockel of Guggenheim Partners. Your line is open.
Hey, Richard. So a couple of things on gross. Even if you take out Fresh Food, right, it looks like the other 3 were up quite a bit. Maybe dive into a little bit similarities driving those 3 big categories versus what might be unique to each. And then how sustainable is that, right?
Because this is this obviously is one of the better core on cores we've seen in a while.
Sure. Well, look, 1st and foremost, there's well, I guess, 2 things. There's a little bit less promotional activity going on. And you think about TVs and electronics, those have been such a strong category not just for Costco, but in general. The manufacturers haven't been doing as many promotional things.
So and the other thing is, given just the sheer sales strength, when you're comping if we comped it whatever it was in August 2014, I don't have it in front of me, whatever. But in some of these categories that we talked about what was stronger, you're talking comps in the low to high 20s. When you've got those that kind of sales strength, you have very on a much smaller scale, you have less markdowns. So you've got a whatever your regular margin is on those categories, less a little bit less without a little bit of an offset from end of cycle or and some of those cycles are 60 60, 90 days by the way and some of those SKUs. So that's helped you a little bit.
And then on ancillary rights, you said 75 percent was gas and travel. Was gas the bulk of that? And if so, was gas more the compare last year versus any decision you made, right, to take less margin? I imagine it's not bad to take less margin and try to drive traffic because markets just not there, right?
Yes. I think in terms of less margin, that's more of our DNA. When things are really good, we're going to drive sales even further and do that. Or when things are good, we're going to we feel a little more comfortable doing the $2 an hour for another month, whatever it might be. But at the end of the day, there's probably less price competition out there today than there was a year ago.
And so we're able to maintain our fair margins.
All right. And then lastly, what's the current thought process on 2 things, expanded BOPIS, right, which you haven't wanted to do for cost reasons and a 3rd tier of membership? I don't know if it would be a higher tier or a middle tier, but sort of segmenting that a little more?
Yes. Well, on buying online and pick up in store, we continue to look at what others do. We continue to scratch our head a little bit. It's not that we'll never do it, but it's not on the agenda for this week. And as it relates to an additional tier of membership, again, I don't think that's on the top of the priority plate at this juncture, given everything else that's going on.
Okay. Thanks.
Your next question is from Scott Mushkin of R5 Capital. Your line is open.
Hey, guys. Thanks for taking my question. So I guess I want to get back, Richard, to the e commerce, the traffic mix and the comments that you've made prior about really wanting to get people into the club. If the pandemic shifts that where you're going to see permanently traffic being an issue there. How are we supposed to how are we thinking about like impulse purchases and just the Costco model once we exit the pandemic if this kind of sticks with omni channel just being a much bigger piece of the pie overall?
Well, first of all, if you mind, if our online business was 5% -ish a year ago and now it's 8% -ish that's a big delta in 1 year and it will continue it will probably continue to increase as a percentage from there. And that excludes the 3rd party Instacart type business, the one day grocery. And so, look, we've been pretty good at pivoting along the way. And we recognize there's lots of attributes to value. The first and foremost is the lowest price on the greatest quality or quantity of goods, services and the trust that we've endeared with our members.
I think that we'll figure that out as we go along. We're not we may be occasionally stubborn on something, but we're not completely in transient if we see we need to do something. We figured out how to do things in a little different way than others and we'll continue to do that.
And as far as the pickup, I know
I think you were quoted in a recent article on this. I mean, how are you thinking about pickup over time? And is there a way to bring that arrow into what you guys are doing without at better economics? I know you've always been cautious about those economics.
Well, keep in mind, when third parties do it, their costs for picking, we believe, we don't know exactly what they are, but we believe based on our wages and benefits is less. And they've created a model that works with their density and everything else. They're not just buying and delivering from Costco. They're buying and delivering to others. So there's some economics in that model that makes sense.
The our view also is there are some retailers that are doing it because they feel they have to. One of the things the article you're talking about is the article today. The one in my view, I would disagree in the article is that we should be concerned because our sales have started slowing, which is the contrary. They're stronger than they've ever been in the last 3 months. So we don't have our head in the sand on it.
We look at it. We have people here that study it. And maybe we'll surprise you one day, but at this juncture, we're not prepared to do that.
All right. Hey, thanks for taking my questions. Appreciate it.
Your next question is from Rupesh Parikh of Oppenheimer. Your line is open.
Good evening. Thanks for taking my question. So I guess just two related questions on real estate. So as you look at your store growth for this year, what's the split between international and domestic? And also just given some of the challenges of brick and mortar, I'm also just curious if you're starting to see more opportunities on the real estate front?
Yes. I mean, I think our general view is that we still feel that we want to open looking at this year and the next 5 years open somewhere between 20 25 a year net new units. About half of those, a little more than half will start by coming in the United States and that will trend over the 5 years to maybe being slightly over fifty-fifty in the U. S. To slightly under fifty-fifty in the U.
S. We still think we have plenty of opportunities in the U. S. It does take longer in certain other countries. I think we're just about ready to do a second unit in France.
We just opened our 3rd unit in Spain after having opened our first unit in Spain, gosh, 5 years ago. We have 1 unit in China with 2 planned for fiscal 'twenty two. We're now in fiscal 'twenty one. And so some of these countries do take longer, but we are also putting a little bit more emphasis on that where we've been successful, where we think we can be successful. And but I think again at the 40,000 foot level, if we did 20,000 to 25,000, a little more than half in the 1st couple of years is U.
S. And by year 4 or 5 or 6, it will probably be instead of 60, 40 or 50 five-forty 5 U. S. It will turn to be just the opposite.
Great. Thank you.
Your next question is from Scot Ciccarelli of RBC Capital. Your line is open.
Thank you. Hi, guys. Actually, another store growth question. What is the limiting factor for you in terms of accelerating your store growth further? Like you've got a grand total of 1 in France and grand total of 1 in Spain, like and you've been there for 5 years.
Like it just seems to me like there could be a lot more store expansion if you really want to push it. And I guess what I'm wondering is what keeps you from accelerating that further?
I think there are a couple of things. First of all, I've always said that we're a very hands on company. And one of the things we've learned when we've gone a little too fast, not to suggest 1 in 5 years is too fast, is not but I remember in Japan, we got to 10 or 12 locations and then in about 18 month period, we opened 8 or 9 and we had a little bit of operating indigestion. As it relates to France, it took us close to 10 years to get our first open. The level of people and entities that can appeal that process and fight you to keep you out is unbelievable.
And again, in Spain, we actually have 3 and a 4th this year. Generally speaking, if I look at various countries, we'd open 5 in the 1st 5 years and that would be relatively fast for us. And but again, it gets back I think to getting that hands on and make sure that we feel comfortable how the market is doing. We're probably a little slower than we could be, but we feel good about it. And it's worked for us and we'll I think continue to do that.
But Richard, that's on the international front. That makes sense. You got to get comfortable with the market and supply chain, of course. But what about just in the U. S?
Like you're obviously comfortable with all the how to navigate kind of store openings and what kind of restrictions you might have. It just seems to me like if you got a decent amount of white space.
Fair enough. Well, I think some of the white space gets better each year. If I look at even the Seattle market, there was a multiyear period where we didn't open any additional units and then we opened on the Eastside here Redmond and a couple of others. And part of it is cannibalizing nearby units. And we try to be relatively methodical and disciplined of kind of the returns that a new unit can generate net of cannibalization.
And could we open 20 instead of 12 or 13 in the U. S? Absolutely. But it's how fast the real estate people and the regional operations people get with our CEO to go through that process and finding the right properties, yes.
Got it. Okay. Thanks a lot guys.
Your next question is from Mike Baker of D. A. Davidson. Your line is open.
Hi. Thanks guys. And it's getting late, so I'll be quick. But I wanted to ask you about the membership fee income up about 5% and change I think this quarter, which has been pretty consistent throughout the year. But I guess how much of that you think is from new members that you're picking up because of the pandemic?
Some of your competitors are seeing big increases in new members from the pandemic. It's hard to tease that out from your numbers. I mean, we compare this to past MFI numbers, but it's a little lumpy because of the fee increases. So any idea of what you're picking up in terms of new members because of the pandemic?
We don't disclose that. It's still a smaller percentage of the total. It's not a majority of the total.
And does it surprise you that those membership numbers aren't accelerating more as you might see from some of your competitors?
Our view when we've looked at some of our competitors' numbers is partly because they have a much lower number of members per location than we do. And we that's our view. But the fact is when we look at how penetrated we are in so many of our markets, I mean, we are even in California where we have 120, 130 units, I forget how many units we have there. I believe we're north of 60 slightly north of 60% member household market share. In states like Oregon and Washington, we're well in excess of that.
So I think that's part of the issue in our view. We've got a lot of people already.
Right. Yes, yes, makes sense. All right. If I could ask one follow-up on gas gallons sold, you said you're at 10% today. That's not 10% for the quarter, down 10% that is, I believe, right?
That's sort of a point in time. Did you mention how your gas gallons sold were for the as we go through the whole quarter?
We did not. That's a more recent number in the last month, let's say. I mentioned that it may have been even in the end of Q3, which ended like May 10th or May whatever around where we were like a minus 50. But my guess is we're somewhere in the low to mid teens for the last month.
For the last quarter or for the last month?
The last month for low teens.
Okay.
And so the total quarter is somewhere in between those two numbers
presumably? Yes. Yes.
Got it. Great.
Got it.
Understood. Thank you.
Your next question is from Peter Benedict of Baird. Your line is open.
Two more questions.
Yes. Hey, Richard. Just a question on how the product shortages the issues that you guys have seen around COVID might be influencing your view on where you might go next in terms of vertical sourcing? I mean, I don't assume there's anything electronics or white goods, but has the experience in the last 4, 5 months maybe curve bent the curve in terms of when certain initiatives might be pulled forward?
Well, in terms of vertical initiatives, we've got the last 2 or 3 years have been quite a bit not only a bakery commissary that serves U. S. And Canada just across the Canadian border, not only a second meat plant in Illinois versus the one we've had for many years in California, not only the poultry complex and not only a couple of smaller produce initiatives we've got going on right now. And last but not even expected but the acquisition of Innovell or what we now call Costco Logistics. So we've got our hands full with a lot of things right now.
I don't necessarily see I think one of the things that we've learned from COVID, we have great relationships with large companies both consumer product name companies and private label name companies doing literally multi 100 of 1,000,000 of dollars of one item. When there has been some shortage of supply, we've had to expand that vendor network a little bit. There are some instances where given our share volume in Aetna now, can we find a comparable manufacturer or an existing supplier that wants to do something over there. So I think there's some there'll be some ways to continue to reduce costs on key items. But in terms of what's the next big vertical, I don't know if we know at this point.
Okay. That's fair. And then just thoughts on the travel bookings you had mentioned that you're starting to see a pickup there, but it's further out than normal. Can you give us can you frame maybe what's normal and what you're kind of seeing
right now? I thought that was interesting. This is my definition of what I have understood previously at normal is if you go back pre COVID, the majority of your bookings each day related to stuff for the next few months, maybe a little further out for 5 months before Christmas or 5 months before the beginning of summer. Today, you've got people booking things out 5 9 months in some cases. Now there's two reasons.
1, there's some great deals out there. And 2, in many instances, there's no cancellation charges. And so we'll have to wait and see and part of that will be dictated by we've actually sold and have had some members go on some cruises of late, still a very small number. The car rental business has picked up a little bit better than the other, but still down relative to what it had been pre COVID. Overall yes, overall and mind you, if we book something out 9 months, we don't take it into revenue until it's the trip is taken.
So even though business has improved in terms of what we show in our numbers, there's very little it's just starting to it's not first of all, it's not negative right now. There are a few months there in April, May, June or April, May certainly, where cancellation costs were greater than Trish being taken. Yes, that makes sense.
All right. Thanks, Richard.
Your next question is from Kelly Bania of BMO Capital. Your line is open.
Hi, Richard. Thanks for taking our question. Just wanted to ask maybe a 2 part question here. More and more retailers are talking a little bit about advertising maybe as a way to offset their lower margin e commerce business. And so I was curious, 1, if you could talk about where are e com margins just with all the acceleration and maybe just also remind us what bucket that is in your table.
But then also just philosophically, how do you think about that? Maybe any taking on any more ad revenue to your dotcom business? Thank you.
Well, we're taking on more ad revenue and we keep learning more about that as well as we drive that business. And but overall, the margins it's lower gross margins, part of that is category specific. Electronics which is by far the largest single component of e commerce is a high single digit margin. If you think about it, in the Costco warehouse, you've got fresh that's in the low double digits, sometimes a preteen or early teen. And you've got again conversely electronics which is mid to high.
You also as we try to drive the business in certain new categories like apparel where you buy 2 items and get $5 off or whatever the marketing or promotional item is, there's a lower realized margin on a given category in some of those categories versus online versus in store. So overall, you also have less SG and A. And I get back to what Costco has always been a top line company. We're looking to grow a top line. Certainly, the profitability of e commerce has improved dramatically in the last year with these strong sales, but it's part of the ecosystem.
Where is it in the matrix, it's an ancillary.
It is an ancillary. Okay. Thank you.
Your next question is from Laura Champine of Loop Capital. Your line is open.
Just a quick one, Richard. You've managed to improve inventory turns or grow inventory slower than sales since the onset of COVID. I know that some of this has been supply chain issues or issues with certain SKU sourcing, but that seems to be clearing up. How long can you keep improving inventory turns at this pace?
Well, if we keep doing 14% sales for a while, but I say that tongue in cheek, because we If you go back to April May, the inventory turn had come down, one of the reasons we were planning for additional capital working capital needs. I yes, look, I think we've gotten to a point when we've enjoyed a turn based on how you calculate it in the 12% to 13% range, when you get up to that range, it's difficult to some extent as well. Gas helps it because we turn gas every day. Fresh foods helps it because we turn fresh foods every week or less. I think about every week, maybe a little better than that.
The fact that we didn't have a big denigration on non food items, which we had thought would be an offset to that, so it's helpful a little bit right now. But if you ask me if I could just keep where we are right now, I'd say sure.
Got it. Thank you.
Your next question is from Christopher Mandeville of Jefferies. Your line is open.
Hi, this is Blake on for Chris. Thanks for squeezing us in here. I was wondering if you'd comment at all on the extent to how much have existing customers you had before the pandemic that historically didn't buy general merchandise that are now shopping that category? How much of that example have you seen?
Yes, I don't know off the top of my head that, sorry.
Okay.
Then just lastly, can you talk about renewal rates and your expectations on those? Should we expect them to maybe creep higher given all the comp strength you're seeing now?
Yes. Sorry, you're 0 for 2. We don't guide. No, we don't guide. There are things that help the comp that help the renewal rate, getting people to executive, getting people to do our credit card.
Some of the things we do now when you sign up online Auto bill. Auto bill. And so those are things that help push it upward a little bit or Delivering issue. Yes. The fact to be said but conversely, if we ramped up internationally and not that we're going to do that overnight, but if we ramped up internationally, you start in any new market or new the first few warehouses in a new country, you work on a much lower renewal rate to start with, but a much higher number of initial sign ups because there's a lot of looky loos.
And so all those things weigh in. We feel so far that I know as soon as we show a minus 10th of a percent in the quarter, which knock on wood, we haven't of late, people worry what's going on. But our view is that we're hanging on to our members, We're getting them to we're in most countries, even in new countries, we've seen the trend to more often improve than not. And so I think we feel pretty good about that.
Got it. Thanks so much.
Why don't we take 2 more questions?
Yes. Your next question is from Greg Milick of Evercore ISI. Your line is open.
Hi, thanks. Rick, just one clarification and one question. Did you say e commerce was 8% and then over 10% including Instacart, was that for the year or the quarter? Quarter. Quarter.
Quarter. Roughly.
Quarter and roughly. Yes.
8% ish and 10% ish. Got it.
And then Yes ish. Yes. So on traffic, I guess that was my follow-up.
You talked a lot about and it's nice to see the U. S. Traffic come back through the quarter. Could you help us understand why international traffic remains negative and if there's any outlier countries driving that or is really the U. S.
The outlier with traffic come back? And if you're concerned that that could influence the renewal rates in those international markets? Thanks.
Well, no, Canada is the outlier internationally. Mind you, if U. S. Is a little over 70% of our company's sales, Canada is around 10%, maybe 15% I'm sorry, 15%. And so you've got other international being less than
It's been a drive. There's been a lot more stressful there.
Yes, there have been more restrictions in Canada. Australia also, there have been more lockdowns of late. But Canada and we have no direct warehouse competition in Canada. We've seen their traffic
More negative with the basket even
bigger than the U. U. S. So we still kind of buying and we've seen that improve also. It's that negative has been reduced.
Hopefully that will continue as well. The trend wise, the last 4 months have been on the up and up.
Got it. So the trend is the right direction. It's just taking longer for those countries specific reasons.
It went further down to start with too. I mean I think even that I'm shooting from the hip here, but even several months ago if the U. S. Was a minus 5 traffic, Canada was a minus double digit traffic.
And we have Robert Moskow of Credit Suisse. Please ask your question. Your line is open.
Hi. Thanks for having me on the call. I wanted to know if you're noticing any regional differences in terms of how consumers are behaving during the infection rates are rising in certain states. There's threat of more I don't know if it will fully go to lockdowns or not. But do you see any differences in terms of how they're getting ready for Halloween or worried about trick or treating or anything like that?
And how are you responding to that?
I can't be specific tell you specific about Halloween. The only if I look back over the last several months, the only thing that we saw was is when certain states unlocked more quickly, we saw a little pickup there faster earlier because people getting out faster, some of those states that did that. Other than that, we haven't seen anything dramatic.
I would say honestly, too,
that the pandemic has progressed,
it's more comfortable.
Right. Yes, Bob makes a good point here. I think and we're all guilty of it. As the pandemic has progressed, we're all hopefully
hello?
Yes, Rick, we hear you.
Oh, you can hear me now. I thought I hung up on you, sorry. I think as the pandemic has continued, people have gotten a little more comfortable, hopefully still maintaining the safety protocols, but filling out more often and that's helped us the numbers pick up a little bit as well. And overall, again anecdotally, we feel that people feel more comfortable coming into a place where masks are required, where the places the physical spaces are larger with more cubic feet of open air, if you will. So I think those things have highly helped us.
But the only real difference we saw was during those couple of months where some states opened up a little faster than others.
Okay. Does that mean that
that past reopenings eventually improve, that's a net positive for your business in 2021?
Well, that it's a net positive, but we don't know. Does that also mean that as people eat out more frequently, they're going to buy less food, fresh food or food items at supermarkets and Costco's? There's probably some different offsets there. Again, we believe that some of the things that we picked up through this pandemic in part because a lot of these non food discretionary categories and big ticket categories, some of that's going to be sticky. And once they shopped and had a good experience at Costco at a great value, they'll hopefully continue that.
Okay.
Hey, thanks so much.
Okay. Well, thank you everyone. Have a good day and we're around. Have a good day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.