In this file:
· Costco beats profit estimates and boosts minimum wage in the US and Canada
· Costco Smashes Q2 Earnings Estimate, Falls Light on Revenue
· Costco ups its minimum wage to $15 an hour
· Costco Wholesale Corporation (COST) Q2 2019 Results - Earnings Call Transcript
Costco beats profit estimates and boosts minimum wage in the US and Canada
Costco Wholesale whizzed past analysts' estimates for quarterly profit.
The warehouse club operator's margins were lifted by a drop in gas prices and a shift to lower-cost sourcing.
Costco said it will raise its starting wages to $15 and $15.50 per hour, from $14 and $14.50 per hour in the United States and Canada amid a tight labor market.
via CNBC - Mar 8, 2019
Costco Wholesale whizzed past analysts' estimates for quarterly profit on Thursday as the warehouse club operator's margins were lifted by a drop in gas prices and a shift to lower-cost sourcing, sending its shares up 5 percent.
The company also said pricing pressure on its groceries business had decreased, adding to the upbeat sentiment.
A highly competitive U.S. grocery industry, coupled with the looming threat of Amazon.com expanding its presence in the space, forced Costco and other grocers to slash prices last year and to invest heavily in stores and online.
Kroger, one of the largest grocery chains in the United States, said earlier on Wednesday that it would spend up to $3.2 billion to overhaul stores and improve its online business.
Costco has also bolstered its delivery operations and offers same-day grocery delivery with Instacart.
The company is investing on strengthening its online business, sprucing up its website with everything ranging from Apple MacBooks to La Mer cosmetics.
The efforts paid off, with online comparable-store sales, excluding the impact of fuel price and currency changes, rising 25.5 percent in the second quarter ended Feb. 17.
But Chief Financial Officer Richard Galanti played down expectations of easing competition in the grocery space...
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Costco Smashes Q2 Earnings Estimate, Falls Light on Revenue
Costco Wholesale posted much stronger-than-expected second quarter earnings Thursday but missed Street revenue estimates even as same-store sales over the holiday period were solid.
Martin Baccardax, TheStreet
Mar 7, 2019
Costco Wholesale (COST - Get Report) posted much stronger-than-expected second quarter earnings Thursday but missed Street revenue estimates even as same-store sales over the holiday period were solid.
Costco said earnings for the three months ending on February 17 came in at $2.01 per share, up nearly 27% from the same period and well ahead of the Street consensus forecast of$1.69 per share. Total group revenues, Costco said, rose 7.3% to $35.4 billion but missed analysts' estimates of $35.65 billion. Costco also reported February sales of $10.72 billion, up 5% from last year, or 4.6% on a like-for-like basis, the company said.
Same stores sales for the quarter, excluding fuel and foreign exchange moves, rose 6.7%, Costco said, firmly ahead of the 5.7% consensus estimate. Comparable sales in the US jumped 7.2%, again topping the 6.7% estimate.
Costco ups its minimum wage to $15 an hour
By Sarah Nassauer, MarketWatch
Mar 7, 2019
Costco Wholesale Corp. said it has raised starting wages for store workers to $15 an hour, as a tight U.S. labor market continues to drive fierce competition for hourly staffers.
Executives at the Issaquah, Wash.,-based retailer, which has around 245,000 workers, said Thursday the company raised its minimum hourly wage for U.S. and Canadian staff from $14 this week. It is the second such increase in less than a year at the company, which raised its hourly minimum from $13 last June.
Costco will also increase pay for supervisors and has started offering paid parental leave for hourly employees, said chief financial officer Richard Galanti on a conference call to discuss quarterly earnings Thursday.
Several large employers have been raising pay to lure or keep hourly and part-time workers in a hot job market where unemployment recently touched its lowest level in decades.
Last year, Amazon.com Inc. raised its minimum U.S. wage to $15 an hour. Target Corp., which pays store workers at least $12 an hour currently, has promised to pay $15 starting next year. Walmart Inc., the biggest private U.S. employer with about 1.5 million workers, raised its starting wage to $11 last year.
Costco reported total revenue of $35.39 billion in the quarter that ended Feb. 17, compared with $32.99 billion the year earlier...
Costco Wholesale Corporation (COST) Q2 2019 Results - Earnings Call Transcript
About: Costco Wholesale Corporation (COST)
Mar. 7, 2019
Costco Wholesale Corporation (NASDAQ:COST) Q2 2019 Results Earnings Conference Call March 7, 2019 5:00 PM ET
Richard Galanti - Executive Vice President and Chief Financial Officer
Conference Call Participants
Christopher Horvers - J.P. Morgan
Simeon Gutman - Morgan Stanley
Chuck Grom - Gordon Haskett
Edward Kelly - Wells Fargo
Karen Short - Barclays
John Heinbockel - Guggenheim Securities
Scot Ciccarelli - RBC Capital Markets
Mike Baker - Deutsche Bank
Scott Mushkin - Wolfe Research
Good afternoon. My name is Vincent, and I will be your conference operator today. At this time, I would like to welcome everyone to the Q2 Earnings Call and February Sales. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions]. Thank you.
I will now turn the call over to your speaker today Mr. Richard Galanti, CFO. Sir, you may begin.
Thank you, Vincent, 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 second quarter of fiscal 2019, the 12 weeks that ended this past February 17th, as well as February retail sales for the four weeks ended this past Sunday, March 3rd. Note that the first two weeks of February fell into the second fiscal quarter with weeks three and four of February are the first two weeks of our fiscal third quarter.
The reported net income for the quarter came in at $889 million or $2.01 per share, a 27% increase compared to the $701 million or $1.59 per share last year in the quarter. In terms of sales, net sales for the quarter came in at $34.63 billion, a 7.3% increase over the $32.28 billion reported last year in the second quarter.
Comparable sales for the quarter, as shown in the press release for the 12 weeks on a reported basis, US was 7.4%, Canada was minus 0.3%, Other international 0.7%, for the total company a 5.4%, as well e-commerce for the 12 weeks on a reported basis was 20.2%.
Excluding gas deflation, the impact of FX and some weakening foreign currencies relative to the dollar, as well as revenue recognition, which is an impact this year, the 7.4% reported in US would've been at 7.2%, the minus 0.3% in Canada would be a plus 6.0%, other international instead of being 0.7% reported would be plus 4.8%, for total company the 5.4% reported would become a 6.7%, and again e-commerce reported a 20.2% ex-gas, FX and rev rec 25.5% plus.
In terms of Q2 comp sales metrics, second quarter traffic or shopping frequency increased 4.9% worldwide and 5.2% in the United States. Weakening foreign currencies relative to the US dollar negatively impacted sales by approximately 140 basis points and gasoline price deflation was another minus 50 basis points of impact.
Our rev rec actually benefited comp sales by about 55 basis points to the positive. These are the three factors that we adjust for and that are presented in today's release, as the adjusted column.
In addition, weather conditions adversely impacted Q2 sales by around 0.5 a percentage point and cannibalization weighed in on the comps by about minus 70 basis points. In terms of front end transaction or what we call ticket, our average frontend ticket was up 0.4% during the quarter and excluding the impacts from gas deflation, FX and rev rec our average ticket was up approximately 1.8%.
Going down the income statement, membership fee income...