Costco 1Q17 Earnings Call Notes

Costco Wholesale (COST) Q1 2017 Results

Richard Galanti – EVP and Chief Financial Officer

November has been choppy

“Well, again, we don’t know. We’ll have to wait and see ourselves. We are thrilled that the first few weeks have been good. And again, November, the four weeks of November was choppy frankly, particularly the week of the election. I think it was worse than a snowstorm in terms of nobody wanting to go out and buy stuff and that’s what I read about other retailers as well. And again, over the last few months it’s been a little choppy a little more in November and a little weaker and so at least, what we can tell you at this point is the first couple of weeks have been okay. And again, traffic has seemed to have stabilized until something changes there, who knows”

The last few months have been a little more deflationary

“So overall, I think the feeling has given that the last few months have been a little more deflationary. The view is that it’s another few months of that, but they all believe that it’s going to come back the other way and this is a lot of estimated semi-educated guesses among different departments.”

Average age of membership is coming down

“We recognize convenience is a value but there’s also some things that we can and can’t do. So I think that we’re looking at these things offensively not defensively at this point. I don’t think that I think we’re encouraged when we see the level of millennials if you will that are signing up and we see the average age of our membership coming down. Now you know it was just a couple years ago when the average U.S. Costco adult member was four plus years older than the population as a whole now it’s a little under two. And that’s without a lot of planning but it’s what we do and I think part of that’s the merchandise selection and our ability to change merchandise pretty quickly and certainly things like again organic standout in a big way.”