A：In the fourth quarter, Costco opened new warehouses, including a relocation in Canada, a second warehouse in Sweden, and five net new locations in the US. For the fiscal year, they opened 27 new warehouses, including three relocations, for a total of 24 net new buildings. Net sales came in just under $270 billion, an increase of over 8% versus last year, and e-commerce sales exceeded $19.6 billion, increasing over 15%. Gas volumes also benefited from new and expanded gas stations. Notable milestones included the 40th anniversary of the dollar 50 s hot dog and soda combo and the 30th year anniversary of Kirkland Signature, which saw increased sales penetration.

A：Executive members were offered exclusive operating hours in the mornings and an additional hour on Saturday evenings in all US warehouses, resulting in an estimated $2.6 billion to weekly US sales since implementation. A $10 credit per month on Instacart purchases greater than $150 was also introduced, leading to a meaningful increase in upgrades from Gold Star members to executive membership.

A：The member experience has been improved through the rollout of enhanced checkout technology in all US warehouses, which allows for faster transactions by scanning small and medium-sized items while the member is still in line. The company has also made progress with digital and e-commerce enhancements, such as using data augmentation for search effectiveness, adding passwordless sign-in to the mobile app, and creating waiting rooms for high-demand items to reduce box traffic and improve the shopping experience.

A：Net income for the fourth quarter was $2.61 billion, or $5.087 cents per diluted share, compared to $2.35 billion, or $5.29 per diluted share, in the same period last year. Net sales were $84.43 billion, an 8% increase from $78.18 billion in the prior year's fourth quarter. The quarter's comparable sales were 5.7%, or 6.4% adjusted for gas deflation and foreign exchange (FX). Earnings per diluted share grew 14% when excluding a nonrecurring tax benefit from last year. As of the end of the quarter, Costco had 38.7 million paid executive memberships, up 9.3% from the previous year, with executive members representing 47.7% of paid members and 74.2% of worldwide sales.

A：The reported SGA rate in the fourth quarter was 9.01%, which is higher or worse year over year by 13 basis points. Adjusted for gas deflation, SGA was higher or worse by 9 basis points. The increase was partly due to investments in employee wages and off cycle wage increases, along with higher general liability charges and reserves.

A：Capital expenditure in the quarter was approximately $1.97 billion, and for the full year, it was a little under $5 billion. The company made additional investments in the quarter to support accelerated warehouse growth, increased the pace of warehouse remodels, and made investments in land purchases, manufacturing facilities, and new product offerings.

A：Core merchandising sales grew with double-digit growth in fresh sales, particularly in meat, and non-foods had comp sales in the high single digits. Specific categories such as gold and jewelry, gift cards, major appliances, toys, and men's apparel experienced double-digit growth.

A：The company added a number of high-quality national brand partnerships across a broad range of non-food categories, including Fabletics, True Classic, Aura, and Lady Boss. New Kirkland Signature offerings were also introduced to provide greater value to members.

A：Overall inflation remained in the low to mid-single-digit range. Fresh and food and sundries inflation was similar to the last quarter, with higher inflation in key commodities partially offset by lower inflation in produce and other items. This led to a $43 million LIFO arch for the quarter. The company is working with suppliers to mitigate the impact of tariffs and continue to monitor inflation.

A：The company's supply chain remains relatively stable with no notable issues. For the holiday season, the merchants feel good about the inventory position and are prepared with a strong assortment of high-quality items. Digital eCommerce saw site traffic up 27% with several categories experiencing double-digit growth year over year.

A：The company is focused on delivering a seamless and personalized digital experience, including relevant messaging on the Costco.com homepage based on membership type and benefits. This is a part of a multi-year journey to improve the member experience and is a key enabler for retail media targeting.

A：The company is changing its digital sales metric to report digitally enabled comparable sales, incorporating all online sales including same-day delivery and other direct member businesses. This change aligns with how retail peers disclose this metric and reflects the significant growth in digital sales, totaling more than $27 billion for fiscal year 2025.

A：Recent changes and communication strategies have positively impacted member shopping behavior, as evidenced by increased member reflection, overall household growth, and executive member growth. The extended hours and the monthly Instacart dollar benefit have contributed to these positive effects. The company has also observed that membership fee income is ahead of budget, indicating a strong response to the changes.

A：The company expects the renewal rate to continue to fall as some digital sign-ups from before COVID-19 attrite out of the base. They view the renewal rate as an important measure and have analyzed it closely. In response to potential decline, they are investing in improving auto-renewal for digital members, increasing digital communication, and enhancing the member experience to improve engagement. They are optimistic about stabilizing or improving the renewal rate due to positive overall membership metrics and the strong growth in membership income.

A：The core on core margin performance grew by 29 basis points year over year, which was widespread across all three main categories: fresh food and sundry, and non-foods. Supply chain efficiency, improvements by operators in their depots, and reduced spoilage or shrinkage in the fresh departments were key factors contributing to the improvement. The focus was not on individual quarters but on managing the business holistically over time.

A：The company has focused on maintaining the gross margin rate while navigating tariffs and ensuring value for members. They have seen unit velocity improvements in product categories affected by price increases, as well as successful management of spoilage and labor efficiency in the fresh departments.

A：The assortment strategy for the holiday season involved a focus on necessities and a reduction in non-essential discretionary items. This allowed the introduction of new categories such as sheds, outdoor furniture, and high-ticket items relevant to the time of year. The assortment pivot was made to remain relevant and capitalize on new sales opportunities.

A：The outlook for membership fee income growth is positive. The company is excited about the opportunities for continued growth in the membership base, which is supported by adding new warehouses and maturing businesses. They also plan to add new member benefits, like extended hours and Instacart benefits. While they do not provide future projections, the recent trends and the potential for engaging a younger generation of members suggest a positive trajectory for membership fee income growth.

A：The new executive membership benefits have not been directly correlated to an increase in the volume of new member sign-ups. However, they are contributing to a more engaged membership base, as evidenced by increased shopping frequency among executive members, which aligns with the goal of demonstrating more value for the members and encouraging them to keep upgrading for more value from the membership.

A：The speaker admits it is hard to determine if there has been a spike in Instacart-driven traffic post-Amazon's announcement. However, Costco's ongoing business with Instacart and Uber is performing well and continues to grow at a good rate. The additional executive membership benefit has been accretive and has helped improve the situation. Costco remains aware of new competition and the desire of consumers for the items they have available at home.

A：Costco is aware of new competition and closely monitors the space, emphasizing that the key driver is the Costco items being delivered to customers' homes. The company is very happy with the growth of the business and is seeing strong growth in the second half of the year, although it's not clear what is driving this growth specifically.

A：The company sees some runway for future growth, having made investments in real estate to evaluate opportunities as the geographical footprint expands. There is potential for growth in existing markets and opportunities in new markets. The pace of warehouse openings will not be driven by a specific number and could vary based on opportunities. For 2026, the company expects capital expenditure to be higher than in 2025, due to plans for new warehouse openings, remodel work, and supporting growth in e-commerce and member engagement. The exact number for CapEx in 2026 is expected to be higher than in 2025 and could be a bit higher than sales.

A：The change in inflation is described as being driven by various factors within the food and sundries department. Q3 experienced low single-digit inflation overall, with some departments showing more inflation due to meat, candy, and commodities like beef, coffee, sugar, and corn. However, this was offset by deflation or lower inflation in other departments like produce, berries, avocados, eggs, butter, and cocoa. The acceleration in inflation is mainly seen in commodities.

A：Recent changes to Costco's credit card program include adding 5% rewards on gas and updating the card to be modernized. The company has been pleased with the reaction from members and the growth in the program following these updates.

A：The company's teams are handling the impact of tariffs by navigating through a fluid and changing environment. They have managed costs by improving efficiency, lowering waste and energy, and working with suppliers to offset costs through buying globally and sourcing from different countries. They have also looked at local production and rotating items as strategies to mitigate the impact.

A：The company's approach to absorbing the cost of tariffs while maintaining value for members includes improving efficiency and lowering waste and energy. They have also worked with suppliers to offset costs and saved on the cost of items by consolidating with fewer buyers and suppliers. Strategies like sourcing from different countries and local production have been employed to minimize the impact on costs and maintain value for members.

A：The company is taking an offensive approach to mitigate the impacts of tariffs. They aim to be the last one to increase prices and the first one to decrease them when opportunities arise. They are addressing this like any commodity increase and using various tools to mitigate any price increase, thus protecting their members from price hikes.

A：The company focuses on delivering more value to members and ensuring that the decision to join as a member is the best one they can make. They aim to stay true to this value even as they add more membership benefits and open new warehouses. By focusing on delivering value and growth opportunities, the company expects to continue expanding its membership base. They also see opportunities for growth in international markets, which typically have a larger number of members due to awareness and less competition from other warehouses.

A：The extended hours have led to a positive impact on overall sales in U.S. warehouses, and the company's operators have managed the increase in employee expenses while controlling sales and general administration (SG&A) costs effectively. It is expected that the net impact will be a benefit to the company in the current fiscal year.

A：The company's alternative revenue streams include media, financial services, credit card businesses, and the recently launched buy now pay later product. They also have a successful travel business that adds value to members and drives overall company growth. The company plans to use a unified single data platform to deliver more personalized and relevant messaging to members, which will aid in demonstrating the value of media within Costco. They intend to continue building on these capabilities and sharing updates as progress is made.

A：The business centers in Canada have significant capacity and are expected to grow much quicker, while also seeing opportunities in relocating to larger facilities in the US and expanding into potential international markets.

A：The company is currently managing inflation proactively, and while they cannot predict future tariffs or pricing by competitors, they do not foresee any changes in their plans that would cause inflation to increase significantly.

A：The company has been focusing on improving the digital experience, with plans to continue enhancing the app and website to deliver more targeted and relevant personal messaging for members. They expect to implement more strategies to drive engagement and increase sales both online and in-warehouse.

A：The company's view on Kirkland's Signature is to deliver quality, value, and innovation to members. They are working on closing gaps in the marketplace by delivering quality products and continue to innovate and grow the line, including through partnerships with national brands. The program has grown in penetration due to the efforts of their teams in building and delivering value to members.