I always joke when people ask me as CFO how I’m important — am I important to the strategic whatever of the Company? The fact is, is we’re run by merchants and operators, and we’re there to serve and help them and certainly add our voice. But the fact of the matter is, and Craig for 12 years and now in Ron, you have people that have been here for 35, 40 years and were born and raised and have grown up in this culture. And it is so intact. Just last week when Gary joined us, he had to go through the required two-hour Costco orientation, which includes the obey the law, to take care of your customer, to take care of your employee, to respect your supplier. And then if you do that, you can reward the shareholder. It is — that’s the one thing I can sleep very well at night.
Chuck Grom: That’s great. Thanks, Richard. Enjoy your retirement.
Richard Galanti: Thanks.
Operator: Next question comes from the line of Michael Lasser with UBS. Your line is open.
Michael Lasser: Good evening. Thank you so much for taking my question and best of luck, Richard. You mentioned previously that most of the metrics are moving in the right direction. Could you highlight which metrics are not moving in the right direction, especially from a membership per club standpoint? Are there any signs that some of the more mature locations are either reaching a saturation or starting to see a peak in that metric?
Richard Galanti: No. First of all, when I said most, I was just trying to be human, that nobody is perfect. Everything is working in the right direction right now. And actually, I wasn’t talking just about membership metrics, but in general, knock on wood, things are working pretty well. When I — when we sit in at our monthly budget meeting, more times than not, we get pretty excited about what’s going on from a new merchandising standpoint, newness, buying with conviction, and being aggressive and assertive out there. I mean, what we saw with just even that simple example I gave you with changes to big ticket items and why buy them at Costco, we saw great changes in numbers. So, we know that we’ve got a lot of levers to be able to pull to make this thing work. And so no, I just said, honestly, I said most because nobody is perfect. I didn’t have any particular examples.
Michael Lasser: Understood. My follow-up question is on what seems like an inflection in the discretionary business. To what degree is Costco experiencing improvement in the GenMerch categories as a result of aggressive changes, either like you had cited with the way you’re communicating with the customer or the member, or aggressive actions to take down prices? And if you are pulling those levers hard, is there an opportunity to move even more aggressively to drive the discretionary business? Because it does seem like Costco is experiencing a rebound in some of these areas more so than the rest of retail. Thank you.
Richard Galanti: Yes. And no, and absolutely. When — what is it? It’s called — it used to be NPD, it’s Circana, which is that industry that shows you how you are on different product — non-food product categories versus the industry. When we look at something like appliances in the last several weeks or a couple of months, the industry is flat and we’re up north of 20%. Same thing with tires, more than that percent. And so, now that you can’t say, let’s do everything and everything will be up 20% or 30% because that’s not going to happen. But at the end of the day, the focus of the buyers, as an example, is coming up with new ways to do things, to have great pricing, and to constantly improve that pricing and figure out how to do that with our global buying power with — every time there’s a commodity price increase.
Given an item business, we have buyers that are in charge of 20 and 30 items, if not less, not 200 and 300 items in a category. They know a lot more, in our view, about every cost component of that. And I think — I feel very good that we do a very good job, and I’m not suggesting others don’t, but I know we do a very good job of getting on the phone immediately and working those issues. And as soon as we can get a savings, we’re out there first passing it on. And that’s just our religion. Now, we’re able to do that partly because our sales have been relatively strong, and we’ve lapped some things from last year that have helped.
Michael Lasser: Thank you very much.
Operator: Next question comes from the line of Peter Benedict with Baird. Your line is open.
Peter Benedict: Sure. Thanks for taking the question, and my congratulations as well. Well done. It’s been a pleasure. Wondering if you can maybe talk about Kirkland, the penetration, what’s going on there, any member shopping behavior around kind of private brand versus branded, and maybe what some of the branded packaged good companies are doing to maybe get some volumes up. Just curious about your view on that.
Richard Galanti: There’s not a lot of trade down, although when we — we sometimes have more control over certain private labeled CPG items that we’re able to drive more business, and so we’re seeing an increased penetration of that versus some of the brands sometimes. But then that gets the brands to the table to work to provide more value on the branded as well. We want to be both. But we haven’t really seen — that was a question that happened as “the economy was” — the question is, are we going into a recession, a couple of years ago, and inflation was peaking at 7%, 8%, and 9%, and are we seeing a difference? So, we did see a — if you look back over the last 20 years, and without looking at the exact numbers, it seems like every year we’d grow a 0.25% to a 0.5% of increased Kirkland Signature penetration.
