Membership Fee Increase Timing
Q: When will you raise membership fees?
A: Richard Galanti emphasized that a membership fee increase is a matter of "when, not if," but there is no specific timing. The company feels comfortable with current renewal rates and member loyalty, and it's performing well across metrics. -

Comparable Sales and Expense Leverage
Q: Can you still leverage expenses with lower comp growth?
A: Despite lower comparable sales growth, Costco is managing to leverage SG&A expenses due to higher productivity and continued market share gains. Richard noted that even if comps went to zero, they would figure out ways to manage SG&A effectively. -

Big-Ticket Discretionary Sales Improvement
Q: What's driving the improvement in discretionary categories?
A: Costco is seeing significant improvements in discretionary categories like appliances, driven by changes in communicating value to customers and aggressive pricing. Appliance sales were up over 20%, significantly outpacing the flat industry. - , -

Expansion Plans and New Store Openings
Q: Will you increase the number of new store openings?
A: While Costco expects the number of new store openings to trend up slightly, they are comfortable maintaining around 25 new units per year, potentially increasing to the high twenties or up to 30 in coming years. -

Margin Improvement and Cost Controls
Q: What's driving margin improvement and better expense controls?
A: The 25 basis point increase in core-on-core margins was driven by lapping extra markdowns from last year and improved budgeting by operators. A focus on expense control and more accurate sales forecasting contributed to better expense management. - , -

E-commerce Penetration and Instacart Contribution
Q: How significant is Instacart to your e-commerce sales?
A: Instacart represents about 1.5% to 2% of Costco's sales. Including Instacart and other delivery services would add 1% to 2% to the top-line e-commerce penetration in the U.S. -

Kirkland Brand Penetration and Pricing
Q: How is Kirkland Signature performing compared to national brands?
A: There's been increased penetration of Kirkland Signature products, with a commitment to offering at least a 20% savings over national brands while maintaining equal or better quality. This strategy has driven significant changes in market share toward Kirkland in categories like paper products. - , -

International Store Performance
Q: How are international store openings performing?
A: International stores are performing well, with no significant difference in productivity compared to domestic stores. In new markets, initial sales might be slower, but over time volumes catch up. Some international locations, like those in China, are seeing exceptionally high member sign-ups and sales volumes. -

Membership Renewal Rates and Non-Member Use
Q: Are membership renewal rates declining internationally due to non-member usage?
A: The overall renewal rate is stable, with U.S. and Canada renewal rates improving by 10 basis points. Lower renewal rates in new international markets like China are due to initial sign-ups not renewing after the first year, which is typical as these markets mature. Efforts to reduce membership sharing are aimed at fairness and have led to some new member sign-ups without significantly impacting sales. - , -

Retail Media and Advertising Revenue
Q: How is Costco approaching retail media and advertising income?
A: Costco recognizes the opportunity to grow retail media and advertising revenue. They've hired experienced professionals to help expand in this area, aiming to capture more vendor dollars while maintaining their commitment to member value. -

Impact of AI on Business
Q: How will AI impact your operations?
A: Costco is in the early stages of exploring how AI can benefit the business. They are working with major AI companies to identify potential applications, though specific plans are yet to be determined. -