Costco Wholesale Corporation (NASDAQ:COST) Q1 2023 Earnings Call Transcript

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We’ve gone from a little over 2 million drops. In fiscal ’22, we did a little over 4 million drops, 70% of which is on the site and this operation that we acquired. So we’ve had outsized growth on that. Helped also not only by the acquisition but COVID itself. So we’re comparing against that now. We’ll see where that goes. We think that e-commerce still long term. First of all, as you know, we still want you to get into the warehouse as well. That’s what — so long term, we still think right now, we want to grow the e-commerce. I would say our goal still is to grow it a little more than in line right now because so much of it has been benefited by big ticket items, which have shown some weakness that’s impacting a little bit right now. So — but long term, we want to still be even 9% or 10% of $240 billion or $250 billion business here is a big chunk of business.

In terms of the last question, I’m sorry, I didn’t write it down.

Oliver Chen : Yes. I think of Costco is a luxury company, too. So what are your thoughts on getting the higher income consumers? And anything you’re seeing with your existing consumers in terms of behavior because everybody is under a little bit of pressure as well?

Richard Galanti : Well, again, someone in the room here showed me that I think the data that somebody had asked me about where Walmart had indicated, we’re all looking at that same data. We too saw the metrics of a little bit higher percentage of higher income people coming in, notwithstanding the fact that we start with a higher percentage to start with. That’s — we try to trade you up. And you know the quality of our merchandise, and we’d much rather sell you a bigger ticket item with all the bells and whistles. So I think that — it’s the way we merchandise, and we’re not looking to change that at this juncture.

Operator: We go next now to Greg Melich of Evercore.

Greg Melich : Richard, I’d just like to talk about how — traffic seems to be growing closer to 2% now in the U.S. Is there anything specific going on there? Or we just need to get used to it as recycling lower gas prices and tough out the slower traffic?

Richard Galanti : Perhaps. I mean we still think anything that’s even in the low single digits is great. And we benefited clearly from — over the course of the last year, we benefited, as I’ve seen in our membership sign-ups, more people coming in and the gas business driving that a little bit as well. And just during COVID, we had a higher than previously average tick up and new member sign-ups. And so that’s probably subsiding a little bit at this juncture. But again, we feel good — very good about where our renewal rates are and then the loyalty that our members have. And we’re pretty good at keep trying to figure out ways to get them in. We’re doing — we do online e-mails that are in-line directed for hot items to come in only available in store. And so those are the things that we continue to do.

Greg Melich : Got it. Could you update us on any private label extra gains that you’re getting in this environment or trade down perhaps between proteins or anything like that worth calling out?

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