Costco Wholesale Corporation (NASDAQ:COST) Q4 2020 Earnings Conference Call - Final Transcript

Sep 24, 2020 • 05:00 pm ET


Costco Wholesale Corporation (NASDAQ:COST) Q4 2020 Earnings Conference Call - Final Transcript


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Richard A. Galanti

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 in 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 at least some of those dollars to categories like lawn and garden, furniture and mattresses, exercise equipment, bicycles, housewares cookware, plastics and the like.

And lastly, a few of our ancillary businesses, notably, our optical and hearing aid operations were closed for 12 weeks 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 running. There is still some production challenges due to certain components downstream in the supply chain in the areas like electronics, computer and certain white goods. 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.

And 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, we are getting better. Toughest area overall is still sanitizing wipes, as well as latex gloves. In terms of other PP&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 all -- are currently all pretty good. There had been some slowdowns over the past few months and some allocations and some limits that we had 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 in 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 they 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 sanitation guidelines -- 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