Costco Wholesale Corporation (COST)
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Monthly Sales Update June 2018

Jul 11, 2018

Speaker 1

Hello and thank you for calling Costco Wholesale Corporation. I'm David Sherwood, AVP of Finance and Investor Relations, and I will review with you our sales results for the 5 week retail month of June, which started on Monday, June 4 and ended on Sunday, July 8. This period is compared to the 5 weeks beginning on Monday, June 5, ending on Sunday, July 9, 2017. This call 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. Now with regards to sales. As reported in our release, net sales for the 5 week month of June came in at $13,550,000,000 an increase of 11.7 percent from the $12,130,000,000 last year. For the 1st 44 weeks of fiscal 2018, net sales were $116,810,000,000 an increase of 12.0 percent from the 100 and $4,280,000,000 last year.

Comparable sales were as follows. On a reported basis, the U. S. For the 5 week retail month was at 10.8 percent, the 44 week fiscal year 9.1 percent. Canada, the 5 week retail month was a 6.0% and the 44 week fiscal year 10.1%.

Other international, the 5 week retail month is a 7.3% and the 44 week fiscal year was an 11.8%. Total company 5 week retail month was a 9.7% and the 44 week fiscal year 9.6 percent. E Commerce 5 week retail month 27.9% and the 44 week fiscal year, 34.8 percent. Comparable sales excluding impacts from changes in gasoline prices and foreign exchange were as follows. In the U.

S, the 5 week retail month was a 7.7%, 44 week fiscal year 7.2%. In Canada, the 5 week retail month was at 30.4% and 44 week fiscal year 4.0%. Other international, the 5 week retail month was a 6.9% and the 44 week fiscal year 7.2%. Total Capri, the 5 week retail month is at 6.9% and the 44 week fiscal year 6.7%. E commerce, the 5 week retail month was at 27.7% and the 44 week fiscal year 33.6%.

In terms of regional and merchandising categories, the general highlights for the month of June were as follows. The U. S. Regions with the strongest results were the Southeast, Midwest and Texas. Internationally, in local currencies, we saw the strongest results in K.

Foreign currencies year over year relative to the U. S. Dollar impacted June comp sales as follows: total company had no impact Canada was helped approximately 50 basis points, while other international was hurt by approximately 50 basis points. The negative impact of cannibalization on total company sales in June was slightly over 50 basis points. The impact in the U.

S. Was slightly less than 50 basis points. Canada was impacted slightly more than 100 basis points and our other international slightly less than 100 basis points. Moving to our merchandise highlights, the following comparable sales results by category for June exclude the impact of foreign exchange. Food and sundries were positive mid single digits.

Departments with the strongest results were tobacco, liquor and frozen foods. Hardlines were up low double digits. Better performing departments were majors, garden and tires. Sales and majors were up high teens led by tablets, appliances and computers. Softlines were up mid to high single digits, Better performing departments include apparel, housewares and jewelry.

Fresh foods were up mid single digits. The better performing departments were bakery and service tele. Within the ancillary businesses, gasoline, hearing aids and Food Court had the best comp sales increases in June. Gasoline price inflation added approximately 2 75 basis points to total reported comp sales. The average selling price was up 27% at $3.02 this year compared to $2.38 last year.

Our comp traffic or frequency for June was up 4.4% worldwide and 4.6% in the U. S. The average transaction was up 5.0% for the month, which includes the combined impacts from foreign exchange and gasoline price inflation. Looking ahead, the July reporting period will include 4 weeks beginning July 9 and ending Sunday, August 5 compared to the 4 weeks beginning July 10 ending Sunday, August 6, 2017. Costco currently operates 752 warehouses, including 522 in the United States and Puerto Rico, 98 in Canada, 38 in Mexico, 28 in the United Kingdom, 26 in Japan, 14 in Korea, 13 in Taiwan, 9 in Australia, 2 in Spain, 1 in Iceland and 1 in France.

Costco also operates e commerce websites in the U. S, Canada, U. K, Mexico, Korea and Taiwan. If you have any questions regarding our June sales results or any other Investor Relations questions, please do not hesitate to call Josh Damon at 425-313 8254 or myself, David Sherwood at 425-313-8239. This recording will be available until 5 pm Pacific Time, Wednesday, July 18th.

Thanks for calling and have a great day.

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