“As production ramps up, we are in the process of transitioning our other Asian markets to locally produce skews.”

In context

“y converted from a rigid plastic tub to a pouch. This allowed us to reduce the plastic packaging by 80% and pass these cost savings onto the member, lowering the price by $1 from $19.99 to $18.99. We've also found success working with suppliers to localize production of bulky items, such as water, paper, and laundry detergents. By manufacturing these goods closer to the countries in which they're sold, both costs and emissions associated with the shipment of these goods are greatly reduced. This quarter, we introduced our new Japan-produced Kirkland Signature paper towels. In addition to the emissions benefits from no longer shipping millions of units of paper towels from the US to Asia, the reduced freight allowed us to lower the price by approximately 30%, or $8 per unit in that market. As production ramps up, we are in the process of transitioning our other Asian markets to locally produce skews. Shifting the production country of this one product will result in annual member savings of $30 million. Within ancillary businesses, pharmacy have the strongest sales percentage increase, driven by double digit growth in script counts. Our optical department also performed well, as more members have taken advantage of the exceptional values in brand name frames and sunglasses. On a like-for-like 16-week basis, gas sales were negative low single digits in the quarter as a result of the average price per gallon being 5% lower. This was partially offset by gallon growth of 3%. Inflation was once again effectively flat in the quarter across all core merchandise. Food and sundries and fresh foods were slightly inflationary and this was offset by deflation in non-foods. In the supply chain, we”