Costco Wholesale Corporation (NASDAQ:COST) Q4 2020 Earnings Conference Call - Final Transcript
Sep 24, 2020 • 05:00 pm ET
[Operator Instructions] 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 you're planning COVID cost for Q1 of the next fiscal year? And if I'm not mistaken, I thought that for this fourth quarter, 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?
Richard A. Galanti
Sure. As you may recall on our third quarter conference call, we indicated that such types of costs in the Q4 would be at least $100 million or over $100 million. And of course, $281 million is over $100 million, 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 million a week. To date, we are doing that and we've committed to doing that at least through, I believe the first eight weeks of this fiscal quarter. And again, we'll take that time. And again, our numbers have been very good. Our employees are on the frontline. And so that -- mind you, the fourth 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 is other things that have been -- that won't be repeated in the first quarter at least.
If you go back to the very beginning of time for the first four weeks to five weeks when we stopped doing food samples, we employed those third-party employees ourselves. We paid our third-party to have them -- help us in the warehouse. That was during those three weeks to four 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 have -- 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 first eight 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.
Richard A. Galanti
Sure. Sure. Well, look, I mean the main data points that we look at is, is how strong things have