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    Zhihan Ma • Bernstein

    Zhihan Ma's questions to Costco Wholesale Corp (COST) leadership

    Zhihan Ma's questions to Costco Wholesale Corp (COST) leadership • Q3 2025

    Question

    Zhihan Ma of Bernstein requested a detailed explanation of the LIFO charge calculation and the forecast for Q4, asking how the current inflationary environment compares to the period in 2022.

    Answer

    CFO Gary Millerchip provided a technical breakdown of the LIFO calculation, explaining that the $130 million Q3 charge was a year-to-date "true-up" resulting from the return of low single-digit inflation in non-food items. He projected an additional $40-50 million charge in Q4 if current inflation rates persist. He clarified that overall inflation within their inventory remains relatively low compared to the post-COVID period.

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    Zhihan Ma's questions to Costco Wholesale Corp (COST) leadership • Q3 2025

    Question

    Zhihan Ma of Bernstein asked for a detailed explanation of the LIFO charge calculation, questioning the estimate for Q4 and how the current inflationary environment compares to the period in 2022.

    Answer

    Executive VP & CFO Gary Millerchip provided a technical breakdown, explaining that the $130 million Q3 LIFO charge was a year-to-date catch-up accrual based on an updated full-year estimate of ~$145 million, driven by a return to slight inflation in non-foods. He projected an additional $40-50 million charge in Q4 if current inflation rates hold. He clarified this level of inflation is still relatively low (1-1.5%) compared to the post-COVID period.

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    Zhihan Ma's questions to Costco Wholesale Corp (COST) leadership • Q2 2025

    Question

    Zhihan Ma asked if a timing shift related to the Chinese New Year caused the sequential slowdown in Other International sales in February and requested an update on the long-term international growth outlook.

    Answer

    Executive Gary Millerchip confirmed the Chinese New Year impacted results in Asian markets and advised looking at January and February combined. For the long term, he reiterated plans for 25-30 new warehouses annually, with just under half being international, and emphasized that all international regions are seen as strong growth markets with attractive profitability.

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    Zhihan Ma's questions to Costco Wholesale Corp (COST) leadership • Q1 2025

    Question

    Zhihan Ma of Bernstein asked for details on the difference in renewal rates between online and in-store member sign-ups and inquired about how the Costco Next marketplace might contribute to retail media growth.

    Answer

    Executive Gary Millerchip explained that digitally acquired members renew at a slightly lower rate, which is expected to have a continued modest impact on the overall reported renewal rate. He emphasized that underlying membership growth remains strong. Executive Ron Vachris clarified that Costco Next is a curated, member-exclusive marketplace that enhances member value. He added that any integration with retail media is in very early stages and yet to be determined.

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    Zhihan Ma's questions to Home Depot Inc (HD) leadership

    Zhihan Ma's questions to Home Depot Inc (HD) leadership • Q1 2025

    Question

    Zhihan Ma asked for a breakdown of the 15% increase in inventory, specifically how much was driven by the SRS acquisition and if there was any pull-forward. He also inquired about the accelerating comps during Q1, asking if there was an Easter timing shift and if the exit rate continued into May.

    Answer

    EVP and CFO Richard McPhail explained that the majority of the inventory increase was from adding SRS to the balance sheet, with additional investments made to support online sales momentum. EVP of Merchandising William Bastek confirmed there was no pull-forward and that inventory is well-positioned for the spring season. McPhail confirmed an Easter timing shift benefited March at the expense of April, and adjusting for it would have put April's U.S. comp closer to 2.5%.

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    Zhihan Ma's questions to Home Depot Inc (HD) leadership • Q1 2025

    Question

    Zhihan Ma asked for an explanation of the 15% year-over-year inventory increase and whether the accelerating comps during Q1 were impacted by the timing of Easter.

    Answer

    CFO Richard McPhail attributed the majority of the inventory increase to the inclusion of SRS's inventory, with additional strategic investments to support online sales momentum. EVP of Merchandising William Bastek confirmed inventory is well-positioned for the spring season. McPhail also confirmed an Easter timing shift impacted the quarter, noting that adjusting for it would have brought April's U.S. comp closer to 2.5%.

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    Zhihan Ma's questions to Home Depot Inc (HD) leadership • Q4 2024

    Question

    Zhihan Ma of Sanford C. Bernstein & Co. asked how the complex Pro initiatives, which involve extending more trade credit and holding more inventory, would impact the company's long-term ROIC expectations.

    Answer

    Chair, President and CEO Ted Decker stated that he does not expect a meaningful impact on ROIC from the Pro initiatives. He described the strategy as 'reasonably asset-light,' utilizing leased distribution centers and trucks, and a commission-based sales force. He added that even as trade credit scales, it will not be a material item on the company's large balance sheet.

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    Zhihan Ma's questions to Dollar General Corp (DG) leadership

    Zhihan Ma's questions to Dollar General Corp (DG) leadership • Q4 2024

    Question

    Zhihan Ma questioned the real estate strategy, asking if more store closures are anticipated beyond the recent announcements and how the returns compare between new stores, Project Elevate, and traditional remodels.

    Answer

    CEO Todd Vasos stated the recent portfolio review was the right decision, with closures concentrated in challenging urban locations and underperforming pOpshelf test stores. He affirmed a strong growth pipeline with 12,000 potential U.S. locations. CFO Kelly Dilts provided financial targets: new stores yield 17% IRRs, Project Elevate remodels target a 3-5% sales lift, and Project Renovate remodels aim for a 6-8% lift.

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    Zhihan Ma's questions to Dollar General Corp (DG) leadership • Q3 2024

    Question

    Zhihan Ma questioned the lower comp sales lift for remodels (6-8% vs. a historical 8-11%) and asked if the 2025 mix of remodels versus new stores represents a new medium-term model for the company.

    Answer

    CFO Kelly Dilts clarified that the comp lift is lower because the stores being remodeled already have more coolers than in the past, but the IRRs remain superior to new stores. CEO Todd Vasos added that the new 'Project Elevate' allows them to upgrade a larger portion of the store base more rapidly.

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    Zhihan Ma's questions to Target Corp (TGT) leadership

    Zhihan Ma's questions to Target Corp (TGT) leadership • Q4 2024

    Question

    Zhihan Ma of Sanford C. Bernstein & Co. asked for a follow-up on e-commerce profitability, seeking to understand the levers for further improvement, and questioned how the Target Circle 360 paid membership program differentiates itself in a competitive market.

    Answer

    COO Michael Fiddelke addressed profitability, stating the team is focused on making all fulfillment paths more efficient, such as optimizing Drive Up processes to reduce team member footsteps and improving package delivery. EVP Cara Sylvester explained the differentiation of Target Circle 360, highlighting its unique value proposition of offering same-day delivery from Target plus over 100 other retailers via Shipt, and a focus on adding exclusive benefits tailored to what Target guests value.

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    Zhihan Ma's questions to Walmart Inc (WMT) leadership

    Zhihan Ma's questions to Walmart Inc (WMT) leadership • Q4 2025

    Question

    Zhihan Ma asked for the top three drivers of improving e-commerce profitability and the proportion of EBIT dollars coming from high-margin alternative revenue streams.

    Answer

    CFO John David Rainey revealed that advertising and membership alone contributed a little more than 25% of the company's total operating income in the quarter. He identified the top three drivers of e-commerce profitability as: 1) densification of the delivery network, 2) customers paying for express delivery, and 3) the growth of high-margin businesses like advertising and membership.

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    Zhihan Ma's questions to Dollar Tree Inc (DLTR) leadership

    Zhihan Ma's questions to Dollar Tree Inc (DLTR) leadership • Q3 2025

    Question

    Zhihan Ma questioned the performance of the multi-price rollout, noting the comp lift appeared to decelerate from mid-single-digits for earlier conversions to low-single-digits in the latest quarter.

    Answer

    Interim CEO Mike Creedon clarified that the lower aggregate lift was due to the mix of conversions. Q3 conversions were predominantly stores that already had Dollar Tree Plus (2.0 to 3.0), which yields a smaller incremental lift than converting a base store (1.0 to 3.0). He stressed that earlier cohorts continue to perform strongly and that performance improves the longer a store is in the multi-price format.

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