Costco Wholesale Corporation (NASDAQ:COST) Q1 2020 Earnings Conference Call - Final Transcript

Dec 12, 2019 • 05:00 pm ET

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Costco Wholesale Corporation (NASDAQ:COST) Q1 2020 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by and welcome to the Q1 Earnings Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Mr. Richard Galanti, CFO. Please go ahead, sir.

Executive
Richard A. Galanti

Thank you, Laurie, and good afternoon to everyone. I'll 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 first quarter of fiscal 2020, the 12 weeks ended November 24. Reported net income for the quarter came in at $844 million or $1.90 per share compared to $767 million or $1.73 a share last year in the first quarter. This year's first quarter results included a $77 million or $0.17 per share income tax benefit related to stock-based compensation, last year's first quarter results included a $59 million or $0.13 per share income tax benefit related to stock-based compensation.

Net sales for the quarter came in at $36.24 billion, a 5.6% increase over the $34.31 billion sold during first quarter of last year. Comparable sales for the first quarter of fiscal 2020 in the U.S. on a reported basis was 4.7%, ex-gas deflation that was 5.0%, Canada reported a 2.9%, ex-gas deflation and FX plus 5.1%, other International reported 3.2%, ex-gas deflation and FX plus 4.5%. So total company was a 4.3% reported and ex-gas deflation and FX of 5.0%. E-commerce on a reported basis was a 5.5% and a 5.7% on a reported basis.

Total and comparable company sales for the quarter were negatively impacted by approximately 1.5% due to Thanksgiving occurring a week later this year. E-commerce sales in the quarter were negatively impacted by an estimated 12 percentage points. So again, the 5.5% and the 5.7% were impacted to the negative by 12 percentage points. In terms of Q1 comp sales metrics, first quarter traffic or shopping frequency increased 3.4% worldwide and 3.1% in the U.S. This again includes the impact of the Thanksgiving holiday shift.

Weakening foreign currencies relative to the U.S. dollar negatively impacted sales by approximately 30 basis points and gasoline price deflation negatively impacted sales by approximately 40 basis points. Our average transaction or ticket was up nine-tenths of 1% during the quarter, including the negative impacts of gas deflation, FX and the holiday shift.

Next on the income statement,