Costco Wholesale Corporation

followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 a second time. Thank you. And I would now like to turn the conference over to Gary Millership, Chief Financial Officer. You may begin.

Good afternoon, everyone, and thank you for joining Costco's third quarter 2025 earnings call. I'd like to start by reminding you that these discussions will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause actual events, results, and or performance to differ materially from those indicated by such statements. The risks and uncertainties include, but are not limited to, those outlined in today's call, as well as other risks identified from time to time in the company's public statements and reports filed with the SEC. Forward-looking statements speak only as of the date they are made. and the company does not undertake to update these statements except as required by law. Comparable sales and comparable sales excluding impacts from changes in gasoline prices and foreign exchange are intended as supplemental information and are not intended as substitutes for net sales presented in accordance with GAAP. Before we dive into our financial results, I'm delighted to say that Ron Vakris is joining us again for today's call. I'll now hand over to Ron for some opening comments.

Thank you, Gary, and good afternoon, everyone, and thank you for joining us today. As we wrap up the third quarter of fiscal 2025, let me make a few brief comments on some of the highlights. Since our last earning call, we've opened nine warehouses, including Relocation in Melbourne, Australia, our 37th warehouse in Japan, and seven net new U.S. locations. We plan to open another 10 warehouses during the fourth fiscal quarter, which will include our second warehouse in Sweden, our 20th warehouse in Korea, and our 110th warehouse in Canada. For this fiscal year, we expect to open 27 new warehouses, including three relocations, for a total of 24 net new buildings. This will bring our total warehouse count to 914 worldwide. Our merchandising and operations team did a fantastic job in the quarter, delivering some strong financial results while also maintaining our competitive price position despite a challenging macroeconomic backdrop. Capitalizing on the focus and scale we are able to achieve through our limited SKU count and global footprint, we continue to increase the overall value of our membership, including extended gas station opening hours and lowering prices on some key items, such as eggs, butter, and olive oil. The combination of expanded gas station hours, new gas station openings, and lower prices at the pump I've led us to having two of our all-time highest gallon weeks in the U.S. during the last month. In times of the consumer uncertainty, our Kirkland Signature brand is uniquely positioned to provide our members with great quality and great values. And during the third quarter, sales of Kirkland Signature items again outpaced our overall sales growth, with our KS sales penetration up approximately 50 basis points year over year. We continue to move more Kirkland Signature product sourcing into the countries or regions where the items are sold. And this is helping us to lower costs and mitigate some of the potential impacts of tariffs. We're remaining agile as the situation with tariffs evolves, while also supporting the commitments we've made with our long-term suppliers. As an example of this during the third quarter, we rerouted many goods sourced from countries with large tariff exposure to our non-U.S. markets. In the U.S., we pulled forward some items that we had planned for the summer and sourced additional locally produced goods to reduce tariff impacts and ensure that we were in stock. Actions such as these are allowing us to continue to provide great values for our members while also delivering value to our shareholders. Digital and technology are important parts of our future growth, and we're investing to improve the member experience. A recent example in e-commerce is the launch of Buy Now, Pay Later offering through our partnership with Affirm. This new program allows our members greater access to the Costco values on big ticket items, such as appliances, furniture, consumer electronics, and much more at exclusive rates for the Costco members. While still early days, we've been pleased with the initial sales results. And in our warehouses, we continue to work on opportunities to further improve the member experience. Please be on the lookout for several new technology pilots we are focusing on to help our members check out through our front end at a faster pace. As we look ahead to the remainder of the fiscal year, while the impacts of tariffs and the outlook for the economy in general remain unknown, we are confident in the ability of our operators and merchants to rise to the challenges and continue to offer great service and find consistent values for our members. Our results in recent quarters have reinforced for us that in uncertain times, our values resonate with members as strongly as ever. With that, I'll turn it back over to Gary to discuss the results for the quarter, and I'll jump back on during Q&A to field some questions. Thanks, Ron.