Good morning. My name is Kayla, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q4 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session.
I will now hand today's call over to Richard Galanti. Please go ahead, sir.
Thank you, Kayla. Good morning to everyone. Last night, we reported operating results for the 16 week Q4 52 week fiscal year that ended August 30. These results are compared to the similar 16 and 52 week periods of fiscal 2014, which ended last year on August 31. Please note that these discussions will include forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1990 5.
These statements address risks and uncertainties that may cause actual events, results and or performance to differ materially from those indicated by such statements. These 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 we do not undertake to update these statements except as required by law. To begin with, our Q4 fiscal 2015 operating results. Net sales for the Q4 came in at $35,000,000,000 up 1% overall a year ago.
Comp sales were down 1% on a reported basis, but were up 6%, including the negative gas and FX impacts. Gas prices for the quarter were down 21% year over year, negatively impacting U. S. Comp figures by a little more than 3 percentage points, so a +6 percent U. S.
Comp excluding gas price deflation. Foreign currencies overall were weaker relative to the dollar year over year in the Q4, such that our reported international comps on a reported basis of minus 10% in Canada and a minus 7% in other international, Assuming flat year over year FX rates and excluding gas price deflation would have been plus 7% in Canada and plus 6% elsewhere internationally. For the quarter, earnings per share came in at $1.73 up $0.15 or 10% from last year's 1.58 dollars In terms of a year over year EPS comparison, a few items of note. The biggest item of note, FX. In Q4 year over year, the foreign currencies where we operate were weaker versus the U.
S. Dollar, resulting in our reported foreign earnings this year in Q4 being lower by about $53,000,000 after tax or $0.12 a share than these earnings would have been had FX exchange rates been flat year over year. Number 2, income taxes. Our income taxes this year in Q4 included several discrete items that in the aggregate decreased our income tax line by 23,000,000 dollars or about $0.05 a share. The largest component of the $23,000,000 figure was a $17,000,000 or almost 0 point 0 $4 a share income tax benefit that resulted from our decision to repatriate in the near future from Canada back to the U.
S, CAD750 million or about CAD560 million of cash balances. 3rd item of note, IT modernization. As discussed in the past several quarters, our major IT modernization efforts are ongoing and will continue to negatively impact our SG and A expense percentages through the next fiscal year and possibly beyond, especially as new major systems are placed into service and depreciation begins. In the Q4, on an incremental year over year basis, these costs impacted SG and A by an estimated $22,000,000 or 6 basis points, 4 basis points without deflation in FX or about $0.03 a share. And lastly, LIFO.
Last year in Q4, we recorded a pre tax LIFO charge of $11,000,000 pre tax or $0.02 a share. This year, we actually had a LIFO credit, a bring back of $14,000,000 pre tax or $0.02 a share. A lot of that had to do with gas deflation. In terms of new openings, for all of fiscal 2015, we opened 25 new locations, which included 2 relos, so a net of 23, 12 new in the U. S, 3 each in Mexico and Japan and 1 each in Canada, UK, Taiwan, Korea and Australia, which therefore ended fiscal 2015 a few weeks back with 23 net new warehouses and a total of 6 86 locations operating worldwide.
For the current fiscal year 2016, our plans are to add up to 32 net new warehouses, including a few business centers in the U. S. 18 to 20 of the planned new locations will be in the United States with the remaining international markets, including our second opening in Spain and our first opening plan for France. During the 1st 4 months of 2016 through calendar year end, we plan to open 13 of those up to 32 warehouses, including 2 relos, so net of 11, 9 in the U. S, 1 each in Canada, Australia, Japan and Spain, and then the 2 U.
S. Relos are in that 11 figure in the 9 figure, sorry. Also this morning, I'll review with you our membership trends and related activities, our e commerce activities, plenty of discussion on margins and SG and A and recent stock repurchase activities. Okay. So for our Q4 results, sales again for the Q4, 16 weeks ended August 30 were $35,000,000,000 up 1% from last year's $34,800,000,000 On a reported basis, again, comps were down minus 1%.
For the quarter, this minus 1% reported comp figure was a combination of an average transaction decrease of about 4.5% for the quarter. And again, this included the detriment from FX of a little over 4% and gasoline price deflation of a little over 2.5% impact. So as you can see excluding these negative factors, comps overall were up 6% and the transaction actually on a ex gas and FX would have been slightly positive. And an average frequency increase of just under 4%, about 3.75%. In terms of sales by geographic region, most U.
S. Regions registered low single digit comp increases. Again, these numbers include the impact of gas deflation of a little over 3% in the U. S. With the Midwest, Texas and California being the strongest.
International and local currencies, the strongest results were in Australia, Mexico, Taiwan and Spain, recognizing Spain only has one new unit one unit. In terms of comp sales by merchandise categories for the quarter, for food and sundries, comps were mostly flat for the quarter. Again, all these items all these figures include about a 4% detriment from FX. The better performing departments were deli, sundries and candy within hardlines in the low single digit range. Better performing departments were sporting goods, hardware and automotive.
Consumer electronics were negative low single digit year over year, positive low single digit ex FX. For softlines, comps were in the low single digit range. Better performing departments included home furnishings domestics. And within fresh foods, comps were in the low single digit range as well with the best results in deli, produce and meat. Moving on down the income statement to membership fees.
On a reported basis, membership fees came in at $785,000,000 or 2.24 percent of sales. That's up $17,000,000 or 2% in dollars and up 3 basis points. Again, FX has a big impact on these dollar figures. Assuming flat year over year FX, the 2% dollar increase would have been up 6%. In terms of membership, we continue to enjoy strong renewal rates, 91% in the U.
S. And Canada and 88% worldwide. And a strong also we're enjoying strong sign ups both new and existing warehouses and continue to strengthen our executive member program. In terms of members at fiscal year end, we had 34,000,000 Gold Star members, up from the most recent quarter of 33,200,000 primary business $7,100,000 up from $7,000,000 continue to have business add on members of $3,500,000 so all told member households $44,600,000 at fiscal year end, which is up from $43,700,000 16 weeks earlier. Including additional cards, total cardholders out there stood at $81,300,000 at fiscal year end, up from 79.6 $1,000,000 fiscal quarter ago.
At fiscal year end, executive memberships were 16,100,000, which was an increase of about 400 1,000 members since Q3 end, so about 25,000 a week increase in the quarter. In terms of membership renewal rates, as I mentioned, they continue strong. Total came in rounds up to a 91 for U. S. And Canada and total worldwide rounds up to an 88.
Getting back to the income statement, our gross margin in the 4th quarter on a reported basis was higher year over year by 44 basis points coming in at 11.14% this year versus a year ago 4th quarter at 10.70%. Without the impact of gas price deflation, that increase would be up 15 basis points. Now I ask you to jot down just 2 columns of numbers, looking just at the Q4 here. Both the column 1 would be reported basis and column 2 would be without gas deflation. First line item would be core merchandise.
On a reported basis, year over year up 17 basis points, ex gas deflation down 8 basis points. Ancillary businesses reported plus 25%, without gas plus 18%. The 2% reward increasing sales penetration related to executive member sales of a 2% reward, minus 5% reported and minus 2% ex gas LIFO, plus 7% and a plus 7. In total, the reported basis, as I mentioned, plus 44 basis points and ex gas plus 15%. Now reviewing these figures, again, the core merchandise component was up 17%, but minus 8% without gas, primarily a function of improved year over year gross margins with our gasoline and several other ancillary and warehouse businesses.
The core merchandise gross margin, which I define as the main four departments, merchandise departments, food and sundries, hardlines, softlines and fresh foods, As a percentage of their own sales were actually up 13 basis points year over year. Food and Sundries, Hardlines and Softlines were up year over year, while Fresh Foods was a little lower. Ancillary and other business gross margins were up, as I mentioned in the chart there, up 25 basis points, plus 18 without gas. We enjoyed broad based strength across most of our ancillary businesses with year over year gross margin improvements in gas optical hearing aids as well as solid operating results in e commerce, business centers, travel and executive member services. In LIFO, in the 4th quarter, as I mentioned, it was about 4 year over year was a 4 basis point benefit of $14,000,000 compared to a 3 basis point detriment a year ago of $11,000,000 Our year end inventory shrink results were in line with our all time best results and our inventory positions are in great shape.
All in all, gross margin inventory is in good shape. Moving on to the SG and A. Our SG and A percentages year over year in the 4th quarter were higher or worse by 27 basis points coming in at right at 10.00 percent of sales this year compared to 9.73% last year. Again, taking out gas deflation, essentially flat year over year at higher or worse by 1 basis point. Again, I'll ask you to jot down the two columns, Q4 reported and Q4 ex gas deflation.
In terms of operations, reported -15 or higher by 15 basis points. Without gas deflation, plus 8 basis points or lower or better by 8. Central, a -7 and a -5. Percent stock compensation, a minus 5% and a minus 4%. All told, we came in on a reported basis higher by 27 basis points in SG and A, and again ex gas deflation minus 1 basis point.
And looking at these figures, the operations component of SG and A was higher again or worse by 15. Percent, and again excluding gas lower or better by 8 percent. Within operations ex gas deflation core warehouse payroll and other operating expenses were better by 10 basis points, half of which was improvement in payroll percent. Central expense was higher or worse by 7 basis points year over year, 5 without gas, with nearly all of that variance coming from our IT modernization efforts, 6 and 5 basis points respectively with and without gas deflation. Lastly, stock compensation expense represented again a minus 5, minus 4 without gas, just we have over 4,000 people in our plan and that's done well as a compensation tool.
Next on the income statement is preopening, higher by $12,000,000 coming in at $27,000,000 this year versus $15,000,000 a year ago. Last year in the quarter, in Q4, we had 10 openings. This year, we had 13. Of the $12,000,000 year over year incremental expense, which is about $0.02 a share, a little under half of it is due to incremental units, dollars 13,000,000 versus $10,000,000 The rest, about $7,000,000 of variance is simply increase in preopening expense associated with upcoming openings in the 1st several months of our new fiscal year versus a similar period of a year earlier. All told, reported operating income in the quarter increased $65,000,000 or 6% year over year to $1,156,000,000 this year.
Below the operating income line, reported interest expense was higher year over year, coming in at $40,000,000 this year, up from $35,000,000 a year ago. This is mostly due to the interest expense on the $1,000,000,000 debt offering that was completed earlier this calendar year to fund a portion of the special dividend. Interest income and other was higher or better year over year by $10,000,000 coming in at $40,000,000 this year in the Q4 versus $30 a year ago. Actual interest income for the quarter came in at $12,000,000 compared to $17,000,000 a year ago, so actually lower by 5. The other component of interest income and other was higher or better by 15,000,000 dollars primarily related to various FX related items, a lot with the foreign countries when they're locking in some of their FX needs.
Overall, pretax income was up 6% or $70,000,000 this year versus last year. In terms of our tax rate, our company tax rate for the quarter came in lower than last year, 32.7% this year versus 35.1% last year in the quarter. Again, we benefited from several discrete items in Q4, as I explained discussed earlier in the call, such that overall net income was up 10% or $70,000,000 coming in at $767,000,000 this year in the Q4 versus last year's Q4 net earnings of 697,000,000 dollars For a quick rundown of other items, while the balance sheet is included in this morning's press release, a couple of quick balance sheet info items. Depreciation and amortization for the 4th quarter came in at $351,000,000 and for the year $1,127,000,000 Our accounts payable as a percent of inventories on a reported basis was essentially 100%, 101% both at last year and in this year fiscal year end, Ex nonmerchandise payables, mostly construction related would be that both last year Q4 end and this year Q4 end came in at 89%. In terms of inventory per warehouse, average inventory per warehouse was up $200,000 or 2 percent to $13,000,000 at Q4 end this year, up from 12.8 percent.
That's the actual number, again, excluding, assuming FX was flat year over year, would have been $535,000 or up about 4.2%. The increase pretty much spread across many departments, no real surprises there. Overall, our inventories are in good shape, as I mentioned earlier. In terms of CapEx, in the Q4, we spent $805,000,000 and for all of 2015, capital expenditures totaled $2,400,000,000 Our estimate for fiscal 2016 CapEx is an increase from that $2,400,000,000 level, somewhere in the high-2s, somewhere between $2,800,000,000 $3,000,000,000 range. This year over year increase in CapEx represents our plans for more openings this year versus last year, increased spending for remodeling and expanding ancillary business operations, planned expansion of our cross stock and distribution operations and expenditures related to our ongoing IT spending for our modernization efforts.
In terms of Costco Online, we're still operating Costco Online in 4 countries, U. S, Canada, U. K. And Mexico. For the fiscal year, total e commerce sales came in just under $3,500,000,000 up a little over 20% for the year.
Comp sales in e commerce, again, were also up 20% for both the Q4 and the fiscal year. In terms of expansion, I talked earlier about up to 32 units. Net of relos, we would expect 11 in Q1, 3 in Q2, 7 in Q3 and 11 in Q4, Q4 being a little longer fiscal period of 16 weeks versus 12 weeks than the others. In fiscal 2015, I mentioned on a net basis, we added 23 units on a base of 663, so about 3.5 percent square footage growth. This year, assuming the 32 units on a base of 686, that would be just under 5% square footage growth.
In terms of new locations by country, assuming that 30, 32 figure, about 18 in the U. S, Canada up 3, 2 each in Japan and Australia and 1 each in Mexico, Spain and France. As of 4th quarter end, total square footage stood at 98,700,000 square feet. In terms of common stock repurchases, buybacks, for the Q4, we spent $260,000,000 on 1,836,000,000 shares at an average price of just under $142 On an annualized basis, that would be about $850,000,000 as an annualized run rate during the quarter. For the year, we spent $494,000,000 at an average price of $142.87 In terms of dividends, our quarterly dividend stands at $0.40 a share or 1 point paid in the 1st 2 quarters of fiscal 2015.
This year's $1.60 per share dividend represents an annual cost of the company of about $700,000,000 And as you know, back in February, we did a special dividend of $5 per share, which was a total of a $2,200,000,000 special dividend paid out to shareholders. Lastly, and before I turn it over to Kayla for Q and A, our fiscal 2016 Q1 scheduled earnings release date for the 12 week Q1 ending on November 22 will be after market close on Tuesday, December 8th, with the earnings call the following morning on 9th December. With that, I'll open it up for questions and turn it back to Kayla.
And our first question comes from Charles Grom from Sternity Credit.
Hey, good morning, Richard. Hi. Just on the core margin performance in the quarter, I think you said it was up 13 basis points. Could you delve into the performance by the 4 subcategories? I know you said that food, hard lines and soft lines were all up.
Just curious, why the pressure on the fresh food side?
Well, I think the pressure on the fresh food side is us. When you've got some inflation in some of the commodity items like eggs, you've got we're not changing the price of a 16 pack of muffins or a slice of pizza or hotdog. So it has more to do with that. Nothing really surprising there. If you look at each of those 4 categories, again, overall, the gross margin as a percent of sale, their own sales year over year in the quarter was up 13%.
I think the range was in the low 20s on the high side and the mid teens on that negative downside. So pretty much similar or slightly above last year. No real big changes there.
Okay, good. And then when you look to next year, just kind switching gears a little bit, when you switch to Visa from Amex, can you shape out for us how the switch is going to work and be handled and what you're planning to do with the interchange savings that you're going to generate? And also just looking back, how you handled it in Canada and any surprises on that front?
No, I mean, things in Canada, first of all, went fine, a little different in Canada because of certain Canadian issues, the portfolio was not purchased by the new issuer. So we had essentially have people apply for it. That being said, they shop at Costco, they want that co branded card and it's done just fine. You see a little bit of change in renewal rate when that happens because of auto renewals. You got to re sign people up and everything.
But from improvement in terms of additional monies, be it for us in terms of lower merchant fees or our members in terms of a better rewards on the co brand, That's all been as planned. In the U. S, we're working through everything right now. The plan is for again, the current contract ends at the end of March next year. That could be in and around a month or 2 from there.
The 2 parties, Amex and Citi continue to work towards that end. And we would expect to tell you more when we can. In terms of how it's going to be split between merchant fees and rewards, I think I've stated in the past, our philosophy is to when we save money on product purchases, we want to give most of it back to the consumer, to the customer. And we're looking at all kinds of opportunities to do that. So stay tuned.
Okay. Fair enough. And just last question, August comps are obviously pretty good. Just wondering with September almost closed here, any surprises on September sales for you guys?
If I could tell you, I would. We'll wait until next week.
All right. Fair enough. Thanks.
Our next question comes from Simon Gutman from Morgan Stanley.
Thanks. Good morning, Richard. Quick question, I think you telegraphed this on the sales side, Labor Day, realizing it was in September both years, but this year, the quarter may not have caught I guess the lead up to it. I don't know if that's a big deal from a sales or earnings perspective just quickly on that.
More of just a sales perspective, given you're talking mid single, low single digit numbers reported normalized and reported. We basically in August, it was we feel a negative impact of about 1 percentage point and there'll be a corresponding improvement in September reported for the same reason because of the but it's 4 weeks versus 5, so it's a little less of a positive, maybe 7 or 8 tenths of percent if our crystal ball is correct. So yes, the August numbers were impacted negatively a little and the September number will show a little pause of that and we'll point that out in the release. Okay.
And then the second question on membership fees and the potential increases. Just a question on the thought process. And I think in the past, largely, you've done them to cover inflation. I'm sure there's been inflation over the past 5 years in many areas. So can you talk about considerations and how you think about it?
Are you surveying? Are you probing customers ahead of time to understand what's tolerable? And then taking into account that the landscape is evolving a little. You have some non traditional online model, membership model. So how do you think about the right range to raise that?
Well, I think we've done 6 dollars $5 increases over roughly 30 years, generally about every 5 or so years. We don't do a lot of polling. We look at it internally of have we improved the value of that membership to our member. In terms of the tolerability of it to the member, I know our historical 5 and in the case of the executive member last time 5 years ago, a $10 increase is a than we see in other types of fees out there, be it fees for your television or your phones or other services out there. So I personally don't think that's going to ever be an issue.
When is we really haven't talked about it a lot. It's something that we'll probably do at some point, but stay tuned.
Okay, thanks.
Our next question comes from Paul Trussell from Deutsche Bank.
Good morning, Richard. I wanted to just to discuss assortment and fulfillment online. Certainly across the industry, there's been a lot of competition and investments being made in fulfillment, whether it's Amazon or jet.com or some of the newer initiatives from Sam's Club. Could you just discuss some of your recent online sales trends and any updates that you can provide for us on upcoming enhancements around assortment or fulfillment online?
I don't think there's I mean, in terms of there are a few things I mentioned over the last few quarters on a topical basis. We certainly expanded to some extent the SKU selection and added what I'd call more frequent for frequently purchased items be it food and sundries or a few office needs, everything from again sundry items health and beauty aids, K Cups, few apparel items. And so we've expanded that. We took certain key departments and brought them in line. So we're not competing with each other and providing, I think, a little more excitement to that.
We ship out of more than one depot. We first started this for the 1st several years in the U. S. We think we shipped out of 1 depot in Southern California, which meant that it might take a little longer to get to you and it cost us a little more in terms of delivery or the member. And as we've expanded, we've improved that quite a bit as well, quite a bit for us.
And we're pleased with the fact that sales for the last, gosh, the last 2 or 3 years at least have been on a year over year comp basis around 20%. So we're doing it methodically. We're not going to go crazy out there. I think our mobile apps have improved and will continue to improve. And we like the value proposition we have.
We're recognizing that we can't be everything to everybody. That's not what we do for a living. And but we have great value. We also like the fact that some of these other services are buying from us. Some of our top customers are some of those guys.
So if we can't deliver that single unit of milk or cereal to your doorstep, someone that is may want to buy from us.
Got it. That's helpful. And you spoke about the impact to margins from an IT modernization standpoint. Could you just give us a little bit more detail about what some of the latest focus points have been in terms of system upgrades and what we should be looking forward to you all tackling over the fiscal 2016 period?
Well, going back again, 3 ish years ago, we embarked on a pretty significant effort to really upgrade and modernize all our systems. Our systems were for the most part legacy systems, many of them written in house, many of them what I'll say were band aided over the years and worked fine, but were arguably strained. Some of the systems that were included in there that were not legacy were from outside suppliers that were not going to be supported going forward or had not been supported. And so we probably started a little later than we should have a few years ago and we had a lot going on as I've indicated over the last each quarter frankly, what we try to do is just show you really what the expense associated with those incremental efforts are. We've installed a new membership system a little under a year ago, I think.
We installed a new point of sale system, which is another deliverable fuel. There's a lot of small deliverables that I won't go into. We've got several more over that are heavy into the expense side and should be forthcoming over the next year to 2 years. The other thing I mentioned in terms of where I talk where it's hitting SG and A on an incremental basis over the last few years, I think we're now up to something in the low teens, 12, 13 basis points. Those 2s, 3s and 5s that have added each year.
And recognizing your denominator, your sales expenses or sales keep increasing. We're seeing all the costs associated with it. I think we'll start to see benefits when we look out beyond 16, doesn't mean that this SG and A line will not go up fewer basis points, we'll see. But we're there's a light at the end of the tunnel. It's sometimes it's a long some days it's a longer tunnel than others, but we're starting to see some deliverables from it.
So it's not a lot I can tell you about where the benefits are. There are clearly some benefits that we're going to see on the transportation side, some of the ancillary businesses like travel and other things. But the big switch over will be when buyers are buying on a new transportation and other. But we don't want to put any dollars or basis points on those improvements. We had to do this if we want to double our size over a 10 or so year period, starting a couple of years ago with these expenses, because we had a lot of systems that were really strained and this is going to set us up for the years to come.
Much appreciated. Good luck.
Our next question comes from Oliver Chen from Cowen and Company.
Hi, thanks a lot. Good morning, Richard. Regarding a bigger picture question, I was curious about your thoughts on what really sets you apart from other Internet pure plays in terms of your supply chain and vertical integration and kind of the buying scale and scale you have there. And then also international is a nice piece of the business just as we look at our models and talk to this part of the story, which countries do you have the most opportunity to increase your store base versus maximum potential? Thank you.
Sure. Well, in terms of e commerce, I mean, first we're different because we for us we have a lot more items. We have 8,000 or 10,000 or so instead of 3,700 in store. That's a bit compared to everybody else out there that has 100 of 1,000 if not millions of items. I think what separates us is we've got certainly we and others will have great quality merchandise.
We've got the best pricing overall. We work on margins that are at or slightly below our reported total company margins. But up there, high singles, very low double digits. We'll compare that to anybody out there. Again, we recognize we're not going to be selling single items delivered within an hour or 4 hours or overnight necessarily.
But in a methodical way, we think we're doing just fine and we think we'll have additional opportunities. And as I mentioned earlier, we're selling to a lot of these other guys that are wanting to deliver in certain unique ways. There's room for all of us. We've got to keep it's a big pie out there in terms of market share. And we think that we'll be able to take our share of that.
Some little sub departments you lose a little, others you make a little. Certainly, we want people to still come into our warehouses. In terms of opportunities outside of in terms of warehouse club growth opportunities, I think the first comment for those of you on the call who have known us for a long time, the market potential keeps improving. I don't think we ever would have thought, when we had 60 or so locations in Canada, we never thought we'd have more than 80. We now have more than that.
We will certainly be over 100 at some point in the next several years. In the U. S, we're expanding, if you'd asked me 5 years ago, when we were 80 U. S. 20 international, I'd say 5 years hence or now, it's probably fifty-fifty and going further south in terms of the percentage of openings in the U.
S. We keep finding more opportunities here. So that's good news. In terms of our countries, we think we've certainly got a lot of potential in the 3 countries in Asia we're currently at. Bigger market, of course, is Japan, much bigger than Korea and Taiwan.
But we think we could go from the low teens in each of Taiwan and Korea, double over the next 10 years, but we'll see. It's one at a time. Australia, we only have 7 units in a country that's what 2 thirds or a little more of that than the population of Canada, which has 80 or 90. I'm not suggesting we're going to have 2 thirds of that anytime soon, but we certainly can add a few there. Western Europe, we'll see.
It's been tough getting in with all the rules, regulations and permitting process, but we're pretty interested to continue that process. Again, we'll open our 2nd unit in Spain next month in Madrid in Getafe, a 3rd unit second in Madrid area next calendar year and hopefully our first in France towards the end of the next fiscal year. So we think there's plenty of opportunities. I think we feel comfortable that over the next 5 years, we'll continue to open 30 ish plus units a year. We thought we would do that this year that just ended up certainly in the high 20s and a few of those got delayed and that's life, but we've got a pipeline that's full.
The international generally takes a lot longer for a variety of reasons by country. And but so we think that we'll continue to grow and do just fine in terms of that.
Okay. And Richard, just a quick follow-up. There has been talk in terms of competitors in relation to how competitors are dealing with vendors. Given your buying scale and your leverage and your heritage? I'm just curious on your thoughts.
Thanks.
Well, I'd like to think that the comment that we shared internally and we talked to you guys about is that we're tough but fair. We are tough. We fight for our member every day and we I'd like to think that we do that as much if not more than anybody else. The good news about us in competitiveness is we give the vast majority of any improvement back to the member. And that in our view creates that moat that hopefully continues to get bigger.
We one of the challenges and opportunities we have is just the sheer size of our needs of various commodities, organics, nuts, long staple cotton, you name it. And so we've got a lot of efforts in that area that I think many of our competitors don't necessarily go to that level because they're dealing with vendors and lots of more items. And so I think we have some opportunities and challenges that but opportunities and challenges that I think create something special about us. I don't think anything has changed. As we get bigger, we can be tougher, but still fair.
And we work with our vendors. We think we have good don't. But we'll continue to be very transparent in how we deal with our vendors and we have very good relationships with many, many of them.
Best regards. Thank you.
Our next question comes from Dan Binder from Jefferies.
Hi, good morning. It's Dan Binder. My question had to do with ancillary margins. The last 5 quarters you've had 3 quarters where ancillary margins were up about 15 basis points ex gas deflation and then 2 quarters where they were up substantially more than that. It happens to coincide with the decline in gas prices and what I'm trying to understand is how much of that gross margin improvement in ancillary is sustainable versus just being a function of the way gas was fluctuating during the quarter?
Well, gas for I think most of the last 5 fiscal quarters on a year over year basis has helped a lot. But other the other ancillary business continue to grow and whether it's optical or hearing aid or some of the other warehouse club businesses, all those things add up, travel, you name it. So I think I hope it's sustainable. Other than clearly gas, we have no illusion that some point in life gas prices go up and margins are marginally more normal relative to our history. Right now, it's good for our member in terms of low gas prices and good for us in terms of albeit a lower top line sales.
It's been more profitable on a year over year basis.
Okay. Then the other item I wanted to talk about was other income, which I realize is a function of these FX contracts you talked about earlier in the call, always a challenge to model. I'm just curious if FX rates were to stay roughly where they are today, how do you think that line item would look in Q1?
I don't know. All I can tell you is that we look at it that way too. We manage it in the sense that if you've got a foreign country where some of their inventory purchases are paid for in dollars or euros sometimes, but use dollars as the bigger example. They will choose once they're comfortable with a price point that they're going to be able to convert at that level and sell goods in their local currency, they're going to choose to figure out how much of that they want to lock in. Recognizing locking in just makes it that they're comfortable with that price.
If the local currency continues to weaken, that was good. If local currency that strengthens relative to the U. S. Dollar, shouldn't have done as much. But we don't try to be completely right either way.
So I think over the years, in the last 4 or 5 years, that's a number that is probably ranged from plus or minus $15,000,000 pretax, usually a little less than the number that we had this period, where it's up about $15,000,000 or so. But I'd say, it's we just want to point it out because it's the component of the income statement. It's very hard to predict. I think by doing the way I think by doing the way we do it, we're not going to ever have any giant surprise either way because of some drastic change in FX prices.
And then the last item, the share repurchase picked up a bit this quarter. How are you thinking about it for this coming year?
Well, we'll tell you each quarter end. It's part of our what we do with our cash. As long as we feel good about our future, we're not going to ever be we're going to buy on a regular basis, not try to pick the market. I think the fact that we bought a little more this quarter as the stock should go down a little bit. But as I said in the past, we buy a little more when it goes down and we and but we still certainly I certainly feel comfortable about our future prospects as a company.
So don't expect giant changes in how we've done it in the past. Certainly, we trended each quarter this year on an annualized basis upward and we're certainly comfortable at the current level.
Great. Thanks.
Our next question comes from John Heinbockel from Guggenheim Securities.
So Richard, if you look at the 3 categories or the 3 broad departments, we saw some margin improvement. So two things, was there any common themes there in terms of maybe COGS doing a better job on your cost or KS mix? So any commonality there? And then if we kind of reached a point here, I assume the KS mix will continue to get better and how you buy that will continue to get better where there should be an upward drift in gross just secularly because the elasticity of what you would choose to invest in kind of doesn't merit right, putting all of that back into the market price wise?
I'd like to think that we were that smart. Overall, I mean, we try to improve margins a little while lowering prices. And I mean that sincerely. And we're going to give most of it back to the customer and to our member. As you know, we're pretty stubborn and intent on maintaining in a rising commodity standpoint, prices on certain fresh foods.
So we've seen some impact there to the negative. I think you're right though, as we continue to improve increase penetration of KS that helps a little. Certainly as we've had relative strength in the departments over the last couple of years like soft lines and domestics and elsewhere, some of those items, we can improve that a little bit. And that's, of course, outside of the ancillary and other businesses, which in some cases work on higher margins as a starting point, be it pharmacy or hearing aid center or optometry or whatever else. So but the organics helps in a small way.
I've mentioned in the past, not only organics relative to their substitute, the non organic same products, organics sell at a higher price point. But our view is, is that others, while it may be competitive, we actually can be we show a more competitive framework and a little bit higher margin than on the underlying non organic items. So it's really in our view a win win for us, challenge being getting more organic and that's not a challenge, that's a challenge for us of course, it's a challenge for everybody out there. So all those things help. I don't think we started the fiscal quarter and said, let's see how we can get an extra 10 or 15 or 20 basis points higher than year over year.
But we're always trying to improve a little as we know we have challenges elsewhere.
And do you think at least I've noticed this particularly I think more with soft lines, but do you think the quality of KS, it seems to continue to get better maybe at a faster pace even than it has in the recent past. Do you think that's fair? The quality is getting better, that's the investment not price point so much?
Well, I think 2 things. Like on the soft line side, like apparel and everything, we've over the last few years, we've made a bigger effort in their area. We took what sometimes would be a retail branded item at $200 to $300 for a pair of slacks that were at $49.99 But when you go out and buy the same fabric and make it hopefully a very good quality item and commit to a 500,000 or 1,000,000 units or something that helps. So we're always pushing the quality and the quantity and buying power of that. And that quality value relationship continues to I think improve.
Okay. And then just lastly, I don't think you guys have done a whole lot of data mining, right, with your membership base. Do you see that and does IT modernization allow you to do that? And then I'm wondering when you think about sales sort of comp sales by comparable member, I'm just curious when you look going forward, do you guys see a bigger opportunity to get and I'm not seeing the most loyal members, maybe somebody a little bit below the top. To come in more frequently and that's a fresh food driver or more of an opportunity to get product and more items in the basket per trip.
When you think about sustainability of comps by somebody who's been a member for whatever 3, 5, 6 years, when do you see the bigger opportunity?
Well, 1st and foremost, we've gone from doing virtually nothing to being a little more open minded about it. I think there's a lot of low hanging fruits that we haven't done. Certainly, there's more efforts in these areas in our membership marketing team on dotcom a little bit, but we don't do a lot with it, but we're doing a little more than we used to. I mean, we must get a call a week from some analytics company that wants to film stuff to do AB testing, left or it's a catch up, left or right of the mustard. We've done, I think, a better job on our multi vendor mailer in terms of that.
But we have I think we have more opportunities than we've even touched the surface on, but I'm not suggesting that's going to be tomorrow afternoon. Marketing has definitely been told to try some new things and we haven't, they generally work. I view that more as something if things start to slow a little bit, we have some opportunities there. But we're 1st and foremost focused on just constantly driving quality and value on the products and services we sell. And that's we seem to have not figured out where the bottom of that is.
Okay. Thank you.
Our next question comes from Bob De Brule from Nomura Securities.
Hi, Richard. Good morning. I guess I just have a couple of questions. I think last quarter you had quantified the impact on the gas profit. I think you said it benefited by a penny.
I was wondering if you could give us that same metric this quarter. And the second question that I have is, I think with some of the remodels that are going on, can you just talk a little bit about category focus in the remodels and your expectation on what the returns and the comp uplifts we might see?
Yes. What was the first question? I lost Gas profit.
Gas profit.
There was not a big impact. It was a wash year over year. It's more than a few cents, but not a heck of a lot. We really don't talk about other directionally which way it helped us. Certainly, I think 4 at least 4 of the last 5 fiscal quarters on a year over year basis, it's been up more outsized than normal up.
And the second question?
Remodel, like trends in remodels, what would be the expectation that you see category focuses and how that might impact comp store sales as we sort of go through this?
Sure. And keep in mind remodels, I think of traditional retail stores remodel, they're doing a whole new front, new flooring and new lighting fixtures. I mean, a lot of our remodels are everything. And we spent a lot of money on increasing refrigeration and frozen in the fresh foods area that continues as somebody mentioned earlier, that continues to be a driver of our business and certainly something pretty good at. We constantly try to figure out what locations that we don't have, where we can put gas stations, although we're saturating that.
There's certain existing locations that are never going to have a gas station, but we still have a few left there. And we're, of course, have added some gas stations in a few other countries beyond just the U. S. And Canada. So there's little things like that.
There's typically half a dozen or so units a year where we're breaking out a wall, buying some extra land perhaps, adding 10000 or 20000 feet. Where it makes sense, many times it makes sense economically when there's some government incentives on solar. That's small dollar wise, but I'm just throwing out some examples. So remodeling for us is just constantly sometimes improving and updating something, but a lot of times just adding some more stuff, more linear feeder refrigeration is something comes to mind in a bigger way over the last few years.
And then just one question on the ancillary businesses. Can you just talk a little bit about what's happening in the photo business and trends in the quarter and sort of what the expectations are there?
Well, look, you probably are processing less photos than you used to. It's actually about the business itself profitability wise is about flat year over year. Actual photos processed is down. We've enhanced the business on a few other things with everything from canvas pictures to photo books to ink refill cartridges, toner cartridges. And but it's not a business that's going to come back tomorrow either.
It's of all the instrument businesses, that's the one that's it's big, it's profitable, it's not as profitable as it used to be, but it's and we'll continue to look at that space and see what we want to do. But we still have it and it's still we still try to figure out how to improve it.
Thank you, Richard.
Our next question comes from Meredith Alder from Barclays.
Hey, Richard. This is Meredith Adler. I was wondering if you could just talk a little bit about kind of what happened with the store openings this year, which I think missed your expectations. I know some slipped into next year. But were there any common themes in that?
And when you look out, because you've got a nice number of openings for next year, do you think that there's any risk based on what happened in fiscal 2015?
Sure. There's going to always be risk. I think prior to the fiscal 2015 for the few years leading up to that, we actually got better on track of getting closer to what we think is going to actually open. We put this is our original budget. Everything that if everything generally goes right and we've already it's been green inks, if you will, it's been approved internally.
We based on whatever permits and zoning issues, whatever all the issues are out there, we think we have a decent chance of opening it. We're going to put it in there. Recognizing it, inevitably there's always 5 or 8 of those units that are budgeted for months 11 12, if not a few more of that fiscal year, maybe 10 units a year in that last month or 2. And inevitably a few of those fall out. I think that we'll get closer than we did this year relative to our budget.
Generally speaking, it's not because we decided not to do a unit that we were going to do it. The only time that happens or virtually every time that happens is something because something became a big surprise. Doing additional drilling, we found something on the site that was a bigger issue. And that's by the way, it's generally not a risk because when we do a site, it's for virtually all of them, nearly all of them. We have to feel comfortable to be able to do it before we commit to it.
Okay. So there wasn't any
I think we'll get closer.
And there wasn't any common theme to the ones that didn't open this year or got delayed?
No, it's everyone's story, but it's just typical delays, weather, zoning, other surprises that are unrelated to competition or anything else out there.
Okay, great. Thank you.
Our next question comes from Michael Lasser from UBS.
Can you give us a little more detail on the traffic trends, not only in this quarter, but over the last very few years? Are you seeing more of the growth come from the middle tier of the membership base, presumably the most frequent members are tapped out. They can no longer they cannot grow the number of times they're going to Costco. So is it more so coming from the mid tier of the membership population? Or is it more like the least attached members are getting a little bit more attached?
Maybe people are membership and operations know a little more than I do here. And maybe there's some more opportunity. Yes, overall, over time shops go up as people are baking more each year, as they're having family, whatever those issues are. And so certainly an older member in terms of how long they've been a member that increases over time. But it's a lot of things.
It's the merchandising, it's the frequency drivers like fresh foods and gas. It's that incremental shop because somebody all of a sudden needs a maintenance prescription. They got to the age where they're going to come in on one extra time a year because of their timing of their need for cholesterol reducing drug or whatever. So it's a lot of little things plus a few of those things, notable things like fresh foods and gas. It's also executive membership.
It's also the co branded card and rewards. It really is all of the above. I don't there's different reasons. Clearly, when we have new members, whether it was new millennial members or 20 years ago, new gen whatever members, they buy less when they start, they buy more over time. I can't tell you what millennials are going to do relative to their predecessor age groups overall, not just at Costco, but overall buying.
If they have smaller houses and they drive a little less and they buy fewer sofas, that is not good for anybody. But at the end of the day, we think we're getting our share.
Okay. And then my follow-up question is how have you noticed or how have you observed your membership population responded to different types of promotions? And when I say promotions, I'm talking about price investments, rewards through your card, maybe new merchandise offers. Can you give us what's been most impactful and how the response has been? Has it been to drive up basket?
Has it been to allow you to sign up more members? Thank you so much.
Well, first of all, we're not going to share all the specifics, but at the end of the day, it's a little bit of all of the above. We work every day to try to improve the value proposition to the member. We work every day to try to upsize an item where it makes sense, because we do want more things and more dollars in that basket. We maybe something like the multi vendor mailer with the couponing, that grew dramatically from what was originally a 6 or 8 week summer item, summer couponing booklet to 11 or so times a year for 3 plus weeks each. And over time, we and our vendors figure out what works best and what starts to slow down.
So those things keep getting tweaked. So again, there's we focus on trying to improve the value. If we can sell you a bigger pack size at a greater value, we're going to do that. I think that's a catch too. We don't just want to increase the size of something 50% and sell it at the same price per ounce or price per number of units.
We only want to raise it for the most part, we try to raise it only the quantity or the quantity when we can lower the price per unit to the member. And that serves us well and it serves them well. So that's our religion.
Sure. I'm thinking more about the card. Does that have as much influence in the numbers purchase decision or frequency as pricing or coupons, for example?
Well, I don't know if one has more or the other. We know that executive members shop a lot take a group of 100,000 members that are similar in terms of shopping patterns and age groups and tenure as a member and they're both growing those both of those groups are growing at roughly the same rate each year. You have to convert to executive member and you see a dramatic change in their buying habits, but that's no change that we've seen over the years. I think what surprises me personally is the continued penetration of that area. And maybe we've got a little better in store of doing that.
Clearly, loyalty programs worth whether it's our executive member program or a reward based co branded credit card. And one of the things that's long term exciting for us is we feel that we can continue even on our co brand card, continue to improve the value proposition to our member, which hopefully gets them in here more often. But that's what we do every day.
Sure. All right. Good luck with the upcoming year. Thank you so much.
Thank you.
Our next question comes from Peter Benedict from Robert Baird.
Hey, Richard. Thanks for taking the question. A couple here. First of all, can you talk about the new member sign up trends in the 4th quarter? I didn't hear if you did mention that, I apologize.
I know they were down slightly in the Q3.
They're actually up in the Q4 year over year. A combination of decent member sign ups at existing warehouses, probably a few more international units in the quarter on a comparable year over year basis in the quarter. I think we're up a little over 2,000,000 members in the quarter from a year ago in terms of new sign ups.
Okay, great. And then, I mean, you mentioned when you gave the regional color, you said that Texas was good. But can you talk about maybe trends in some of the specific energy markets, thinking like Houston, maybe somewhere is up in Alberta? Have you seen any kind of moderation in traffic or ticket or what have you?
I just don't have that amount of granularity in front of me.
Okay. And then the thought process behind repatriating the cash from Canada, why now? And then you've got a $1,200,000,000 note that comes due in December. Are your thoughts here to refinance that or pay it off?
At this point, we'll probably pay it off. Part of the repatriation is Canada is a very profitable country. So it's we've built up cash balances. At some point, we determined on an ongoing basis, we will determine whether we feel it needs to be permanently invested up there or not. And at such time, we'll make that decision.
I think we've that twice. About a year ago, we brought back a little over $1,000,000,000 And this case, it was favorable from a small favorable from a tax perspective. A year ago, I think it was the 3rd Q4 a year ago, it was slightly unfavorable. But again, we determined but small and we determined it was the right time to bring it back from a permanent reinvestment standpoint.
Okay, fair enough. And then last question just on CapEx, kind of $2,800,000,000 to $3,000,000,000 this year, it's almost double what you did maybe a few years ago. I understand you've got some of the investments you're doing to higher store growth. Is that a level you think is one that we should assume kind of holds for several years, assuming you can open 30 plus stores per year? Or are some of the investments you're doing in IT and systems and distribution to those kind of taper off a bit maybe in the out years.
Just how are you thinking about that?
I hope IP tapers off a little, but that's not the biggest piece of it. I think I'm certainly comfortable saying it's going to be in the 2.5% to 3% range. Is the 2.8% to 3 0% this year, 100 or 2% bet likely to be 102 higher than the following year. Maybe I don't see the 2.8 to 3 0 to 3 0 to 3 0.5 next year. So yes, something in the high 2s is probably a good guesstimate for the next few years.
Yes. Okay, that makes sense. Thank you.
Thank you.
Our next question comes from Scott Mushkin from Wolfe Research.
Hey, I actually just had some follow ups on some of the questions that have already been asked, but I want to get some clarity. So I think Michael Lasser was asking about the Visa card. And I guess, real specifically, do you anticipate that card will actually drive membership growth, Richard?
When we get there, we'll let you know.
Okay. And then following up a little bit on John Heinbockel and his kind of the technology. When you're looking at your executive members, do you guys have clarity into the data to say, okay, how many are these executive members using our ancillary services? What are they using? Executive members using our ancillary services?
What are they using and kind of what the penetration rates are?
Yes, absolutely. But we're not going to share with what those are. Each inventory business is a little different. Some of them take a decade to really get some good footing, but they're all great values and yet another reason why somebody wants to be a member and we'll keep improving those values. So those are whether it's KS or organic or commodities or these items, those are all things I think that gives us a good competitive position.
And do you think there's an opportunity to drive additional ancillary business growth with your core members? Absolutely.
Absolutely. Okay. Then I would recommend that you try Costco Travel. You'll be amazed.
I'm looking right now at a Costco card buying program. So I hear that's wonderful.
As well. I think we're approaching 500,000 new cars a year. That is there's a reason we use our buying power to get our members a great savings on cars.
And when you think about getting a little bit more involved in technology and that relationship with your customers, is this one area that you would think could be a lever that could be thrown?
I'm sorry, say that again?
When you're looking at data mining, knowing your customers a little bit better, marketing a little bit more aggressively, I think you mentioned at the beginning. Is this an area that we're going to focus, do you think?
At some point, we kind of a little self deprecating when we talk about that. At the end of the day, there's a lot of opportunities to do a lot of that stuff. We kind of look at it the eightytwenty rule. We're doing a little of it, which we're getting some benefits. There'll be plenty of opportunities to do some of that in the future.
But we our main focus is on driving value and a lot of those other things take care of themselves. And certainly, Craig Jeleneck is our CEO has told people in e commerce, people in membership marketing, try some things and they're trying some things and we'll keep going in that direction.
Perfect. And I had just one last kind of follow-up. This is when Bob was talking about the remodels. I'm just trying to understand that are local cost goes under remodel in the fresh department. And then as you look at 2016 2017, is that the focus of the remodels?
Are you expecting to do more of them? And is it focused on fresh? It seemed like that's where the focus was. I just want to get clarity. And is it going up kind of year over year?
I think as a general rule, it has been going up, but it's up. It's a big number. And I don't know if it keeps going up from there. I know with the one across the street here, we again added 10000 or 15,000 feet. We expanded greatly the walk in coolers for customers and produce and dairy.
What you're doing in some of these units $200,000,000 $250,000,000 $300,000,000 you can drive some true incremental good sales by not only expanding the everything in terms of the traffic patterns and the egress and egress in and outside of the warehouse, but adding some of these things like refrigeration, fresh foods and it will still be a continue to be a big number.
So you're doing more fresh drives traffic. Is the focus in that fresh area on organics or just general or is it weighted towards organics?
Well, I think in terms of CapEx related, it's everything. Organics is just a piece of that.
All right, perfect. Thank you so much. I really enjoyed the answers. Thanks.
Our next question comes from Greg Melich from Evercore ISI.
Hi, thanks. But you've gone over an hour and
I still have a couple
of questions.
So, one of the follow-up on gas, What was the average gas price in the quarter versus last? And if you could give us the gallons as well, that'd be great.
The average price in Q4 was $3.65 a year ago $2.88 this current Q4, so down 21.2%.
Great.
And if that's the case, I guess, going back to gas profitability, I understand it's been a tailwind. I guess it's that incremental drop even from last quarter that's really allowed the profitability to boost up again. Is that are we thinking about that right?
Actually, the price was from a quarter ago, the price was up about $0.20 a gallon. But I think there's a little bit of a new normal. It's not just how it is year over year. It's when it's low, it's better from a profitability standpoint. And it's relative to competition.
GasBuddy has continued to say that we're the lowest price out there nationally. And I think we're still pretty good at being very competitive. And we get a lot of good kudos for that.
So basically, you can keep your competitive advantage, but the penny profit might be better than it used
to be?
Yes. I think when prices are low, we make more than we used to on average per gallon or per gas station. And that's good.
Great. And then the second question was going back to membership fee income. I think you said it was 6% if you exclude FX.
Yes.
I believe that's 100 or maybe 200 bps below the trend the last year or 2. Is that just fewer openings last year? Or I think last quarter you mentioned sign ups per club was actually negative, but it was a comparison issue. Just help us understand
I think overall, it's just fine. There's a little bit in Canada of the auto renewal issue when we switch over and we'll see that again a year hence over the next year starting next year. That's a small piece of it. I don't think beyond that there's a whole lot there in that regard. There's always going to be the timing because when membership fee dollar increases are we use deferred accounting for it.
And so that makes it a little more squishy number. But overall, the number was in line with what we felt was pretty good.
And with the auto renewal effect, I guess I'll sneak a third one in. If I remember the Amex is roughly 40% of the tender in the stores. So to think of the magnitude of that had in Canada when you did the changeover, what was Amex?
Well, there's one big difference in Canada, the portfolio was not purchased. While I can't guarantee it will be purchased, the contract states that it should be and we're working towards that or Citi and Amex are working towards that end. That's a different scenario in terms of auto renewal. Up there, you basically have to re sign people up. They have to apply for credit.
They get authorized. They have re sign up opt in for auto renewal. I don't expect that to be an issue in the U. S. At this point.
Got it.
And the tender there is roughly the same as here, that 40%?
I think it was a little less, but mind you, the market share of our provider up there historically had a lower market share there relative to Canada than they do in the U. S. And a stronger market share down here.
Okay, got it. Great. Thank you.
Yes. Why don't we take one more question?
Our final question comes from Matthew Foster from Goldman Sachs.
Thank you so much for keeping the flame burning just for another moment. First question relates to Spain. And just curious on your learnings from your first Spain opening and how you expect your Continental European stores to differ from your other international markets based on what you saw from that first unit?
Well, like any first unit with maybe the exception of Australia, which was off the charts side to start with, you learn a lot. You learn what sells and doesn't sell. I think if I recall from when we first opened in Seville a year and a half, two years ago, we had less we had stronger non food than we would have expected and not a strong fresh food. Usually, in a new market, you've got stronger fresh food. Given our great success in countries like Korea and Taiwan and Japan, we have to remind ourselves that Korea and Taiwan, they were not very good for several years.
You start off with slower sales in most countries other than Australia when you first enter when we first entered the market, and that was consistent. Probably the worst economy we started was in Spain. But we're seeing some traction. Membership sign ups are just fine and membership renewals have been just fine. But it's one data point does not a story make here.
Madrid certainly is a much bigger market than Seville and we've got again 1 unit coming next month and a second one in and around the trend coming, I believe next spring, certainly sometime in the middle of the calendar year. So that'll be more telling in our view than anything we've seen so far. We continue to be very confident that we've got a good model that works and we're patient as well.
A quick second question on the online e commerce piece, Instacart, I know is a particularly prominent partnership among the ones that you've got and it's a concept that from a in terms of the number of retailers doing business with and how long that's hung in seems to be gaining some traction. Any sense as to how that relationship has evolved in particular how the economics look for you relative to some of the alternatives?
Well, again, we're not going to disclose any specifics. We have a good working relationship with
Fair enough. And then finally, I think Greg one element of Greg's question might not have gotten an answer was gallon comps. You talked a bit about the gas prices. But I remember when gas prices first started coming under pressure, gallon comps surged into double digits. Are you still seeing that with prices down here today?
I'm not sure if it's double digits, but it's certainly positive. And generally haven't given that out, sometimes in a moment of weakness I share with you guys. But the comps have continued to go in the right direction in terms of gallons.
Thank you so much.