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Total Revenues: Nearly $2.5 billion for the second quarter.
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Net Merchandise Sales: Approximately $2.4 billion for the second quarter.
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Comparable Net Merchandise Sales: Increased 8.8% or 5.2% in constant currency for the second quarter.
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Membership Income: $18.5 million for the second quarter, up 14.6% year-over-year.
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Total Gross Margin: Decreased 30 basis points to 15.7% for the second quarter.
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Operating Income: $63.6 million for the second quarter, an 18.2% increase year-over-year.
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Net Income: $39.3 million or $1.31 per diluted share for the second quarter.
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Adjusted EBITDA: $84.1 million for the second quarter.
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Cash and Equivalents: $182.6 million at the end of the quarter.
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Net Cash from Operating Activities: $127.7 million for the first six months of fiscal year 2024.
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Annual Cash Dividend: $1.16 per share, with a special dividend of $1 per share.
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Private Label Sales: Represented 27.1% of total net merchandise sales for the first six months of fiscal year 2024.
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Digital Channel Sales: Increased 31% year-over-year for the second quarter, accounting for 5.1% of total net merchandise sales.
Release Date: April 10, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Net merchandise sales increased by 13% or 9% in constant currency during the second quarter.
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Comparable net merchandise sales increased 8.8% or 5.2% in constant currency for the second quarter.
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Membership accounts grew 5% versus the prior year to almost 1.9 million accounts with a strong 12-month renewal rate of 88.3%.
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Membership income for the second quarter was $18.5 million, an increase of 14.6% over the same period last year.
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Operating income for the quarter increased 18.2% from the same period last year to $63.6 million.
Negative Points
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Total gross margin for the second quarter as a percentage of net merchandise sales decreased 30 basis points to 15.7%.
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General and administrative expenses increased to 3% of total revenues for the second quarter compared to 2.8% for the same period last year.
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A net loss of $7.1 million in total other expense was recorded for the second quarter, primarily due to increased foreign currency revaluation losses.
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The effective tax rate for the second quarter came in lower at 30.5% versus 34% a year ago, primarily due to non-recurrence of CEO separation costs.
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Challenges in meeting high sales volumes during December put stress on management and operational capacity.
Q & A Highlights
Q: Can you speak a little bit about the challenges faced in December and if it resulted in additional costs? A: Robert Price, Interim CEO, explained that certain locations experienced volumes beyond physical limitations, putting stress on managers. However, it did not result in additional expense, and the management team handled it well with expenses in line.