Costco Wholesale Corp

Strong Q3 performance (profit + sales) - Net income: $2.19B ($4.93 diluted EPS), +15% YoY (vs. $1.9B / $4.28). - Net sales: $69.2B, +11.6% YoY. - Comparable sales: +9.8%; +6.6% adjusting for gas price inflation & FX. - Traffic + basket: shopping frequency +2.4% worldwide; average ticket +7.3% (and +4.2% ex gas inflation & FX). - Digital acceleration: digitally enabled comp sales +21.5% (and +20.8% ex FX); website/app traffic +37%; personalization carousels delivered 3x typical conversion and generated just under $5B of e-commerce sales contribution.

Membership growth remains healthy, but some “slowing” is a key investor watch - Paid memberships: 82.9M total paid members, +4.1% YoY. - Executive memberships: 41.2M, +9.6% YoY (a major driver of member spending/loyalty). - Membership fee income: $1.37B, +10.7% YoY (about +9.9% ex FX); US/Canada fee increase (Sep 2024) contributed >1/4 of growth. - Renewal rates: US/Canada 92.2% (+10 bps vs prior quarter); worldwide 89.7% flat. - Management commentary (Q&A): growth moderated recently (noted as due to fewer major new warehouse openings in international markets and cycling tougher comps); nevertheless management views “4–5%” membership growth as more “normal” and expects continued growth potential.

Margins: slight pressure in “core-on-core,” but management frames results as cyclical/mix-driven - Reported gross margin: 11.04%, down 21 bps YoY (vs. 11.25%). - Core margin dynamics: core down 46 bps YoY; but ex gas inflation was +1 bps improvement in the rate-focused view. - Core-on-core: down 9 bps (investor question)—management attributed to sales mix shifts (gas/e-commerce/pharmacy growing faster than core merchandising) and timing/cycling of LIFO. - LIFO benefit/charges: $44M LIFO charge this Q vs $130M last year (improves comparability vs prior-year headwind). - SG&A: rate 8.96%, down 20 bps YoY; healthcare costs + some legal/reserve items limited leverage. - Dividend-free / no buyback discussion: transcript does not mention a share repurchase program or changes in capital-return policy.