Gary Millerchip
Executive Vice President and Chief Financial Officer at Costco Wholesale
Thanks, Ron. I'll start by stating 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 a substitute for net sales presented in accordance with GAAP.
In today's press release, we reported operating results for the third quarter of fiscal 2024, the 12 weeks ended May 12. Before I walk through all the numbers, new for this quarter, we are making available a slide presentation on our investor site, under events and presentations. These slides summarize much of the information I will share today, including Richard's famous matrices. We intend to make this information available every quarter.
Reported net income for the third quarter came in at $1.68 billion or $3.78 per diluted share, up from $1.3 billion and $2.93 per diluted share in the third quarter last year. Last year's results included a non recurring charge to merchandise costs of $298 million pre tax or $0.50 per diluted share, primarily for the discontinuation of our charter shipping activities. Net sales for the third quarter were $57.39 billion, an increase of 9.1% from $52.6 billion in the third quarter last year.
The following comparable sales reflect comparable locations year-over-year and comparable retail weeks. US comp sales were 6.2% or 6% adjusted for gas inflation and FX. Canada was 7.7% or 7.4% adjusted. Other international was 7.7% or 8.5% adjusted and this led to total company comp sales of 6.6% or 6.5% adjusted for gas inflation and FX.
Finally, E-commerce comp sales were 20.7%, both on a reported basis and adjusted for foreign exchange. In terms of Q3 comp sales metrics, traffic or shopping frequency increased 6.1% worldwide and 5.5% in the US. Our average transaction or ticket was up 0.5% worldwide and up 0.7% in the US. Foreign currencies relative to the US dollar negatively impacted sales by approximately 20 basis points, while gasoline price inflation positively impacted sales by approximately 30 basis points.
Moving down the income statement to membership fee income. We reported membership fee income of $1,123 million, an increase of $79 million or 7.6% year-over-year. Membership fee income growth was 8% excluding FX. In terms of renewal rates at Q3 end, our US and Canada renewal rate was 93%, up one 10th of a percent from Q2 end. The worldwide rate came in at 90.5%, the same as Q2 end. We ended Q3 with 74.5 million paid household members, up 7.8% versus last year and 133.9 million cardholders, up 7.4% year-over-year.
At Q3 end, we had 34.5 million paid executive memberships, an increase of 661,000 since Q2 end. Executive members now represent over 46% of paid members and 73.1% of worldwide sales. Our reported gross margin rate in the third quarter was higher year-over-year by 52 basis points, coming in at 10.84% compared to 10.32% last year and up 54 basis points excluding gas inflation.
Core was flat and higher by 2 basis points without gas inflation. In terms of core margin on their own sales, our core-on-core margins were higher by 10 basis points. Ancillary and other businesses gross margin was lower 6 basis points and lower 5 basis points excluding gas inflation. This decrease year-over-year was driven by gas, partially offset by E-commerce. 2% reward was lower by 1 basis point both with and without gas inflation, with higher sales penetration coming from our executive members. LIFO was a benefit of 2 basis points. We had an $11 million LIFO credit in Q3 this year compared to no LIFO charge or credit in Q3 last year.
This is the third LIFO credit this year following a $15 million LIFO credit in Q1 and a $14 million credit in Q2. And finally other was higher 57 basis points or 56 basis points excluding gas inflation. This was all related to lapping last year's negative impact from the $298 million pretax charge for charter shipping activities.
Moving on to SG&A. Our reported SG&A rate in the third quarter was lower or better year-over-year by 15 basis points, coming in this year at 8.96% compared to last year's 9.11%. SG&A was lower year-over-year by 12 basis points adjusted for gas inflation. The operations components of SG&A was lower by 14 basis points and lower by 12 basis points excluding the impact from gas inflation, despite an increase in warehouse wages this year.
Higher labor productivity and great cost discipline by our operators drove the improved core SG&A results for the quarter. Central was better by 1 basis point and flat without gas inflation and stock compensation and preopening were both flat year-over-year. Below the operating income line, interest expense was $41 million this year versus $36 million last year and interest income and other for the quarter was flat year-over-year as lower interest income was offset by a foreign exchange gain in the quarter.
In terms of income taxes, our tax rate in Q3 was 26.4%, compared to 26.5% in Q3 last year. Overall reported net income was up 29.1% year-over-year and excluding last year's charge related to the discontinuation of charter shipping activities, it was up 10.3% year-over-year. A few other items of note, in terms of warehouse expansion, in the third quarter, we opened two new warehouses, both in the US.
Additionally, since the end of Q3, we had two more openings. Last week we opened in Loomis, California and two days ago we opened our seventh building in China in the Nanjing market. For the remainder of fiscal 2024, we plan to open another 12 new locations, nine in the US, two in Japan and one in Korea. This would bring the total for the full year to 30 openings, including one relocation for a net of 29 new warehouses.
Regarding capital expenditures, Q3 spend was approximately $1.06 billion and we estimate full year 2024 capital expenditure will be between $4.3 billion and $4.5 billion. Diving a bit deeper into some of the key themes we saw during the quarter, non-foods have the highest comps of our core categories. This strength was aided by lapping some softness in sales a year ago, but was really driven by our merchandising teams doing a great job identifying high quality items with values that really resonated with our members and buying those items with conviction.
As inflation has leveled off, our members are returning to purchasing more discretionary items and growth in the category was led by toys, tires, lawn and garden and health and beauty aids. Bakery sales also showed great momentum in the quarter, as our fresh foods team has reinvented that department with a number of new and exciting items, including the Kirkland Signature lemon, blueberry loaf and morning buns.
Within our ancillary businesses, the food court had the strongest quarterly sales, with continued success at the chocolate chip cookie that was added to the food court this year. On the inflation front, it's more of the same from last quarter. Across all core merchandise, inflation was essentially flat in Q3, with fresh foods close to zero and slight inflation in food and sundries being offset by some deflation in non-foods.
The deflation in non-foods was led by hardware, sporting goods and furniture, all still benefiting from lower freight costs year-over-year. Keep in mind that when we speak to inflation or in the case of non-foods deflation, we're referring to our selling prices. We're intentionally creating incremental value for our members by delivering lower prices wherever possible.
We believe our strategy of delivering value to drive unit volume and member satisfaction is the winning combination for us. In that vein, our buying teams are constantly aware of changing costs across all of their SKUs and are ensuring that we are capturing all cost decreases quickly, so that we can pass on incremental value through price reductions. If we are unsuccessful in delivering ultimate value with branded goods, we evaluate the potential for new, high quality Kirkland Signature items with a goal of providing at least 20% value versus what we would sell the national brand item at.
This quarter, we released a new Kirkland Signature men's walking shoe and New Kirkland Signature facial wipes, both of which are doing very well. We also reduced prices on a number of existing items, including lowering Kirkland Signature pine nuts from $29.99 to $24.99 and reducing the price of our Kirkland Signature frozen shrimp SKUs by $1. These are just a couple of examples that came out of our recent monthly budget meetings where each country and region shares new and exciting items they have introduced to their warehouses and items where they've lowered prices.
Turning now to Digital, we continue to make enhancements to the app and website and are excited about the traction that these initiatives are getting with members. Total E-commerce sales growth in the quarter was led by gold and silver bullion, gift cards and appliances. In appliances, Costco Logistics is playing a key role in providing both greater value and a better end-to-end experience for members.
Deliveries through Costco Logistics were up 28% in the quarter. Costco Next, our curated marketplace also continues to grow nicely and we added eight new vendors in Q3, bringing the total to 75. Our app downloads were up 32% versus a year ago, with about 2.5 million new downloads in the quarter, bringing total downloads to more than 35 million. Site traffic was up 16% and average order value was up 8%. You may have also recently seen an announcement that we are expanding our relationship with Uber.
Previously, Uber Eats delivered Costco orders in Texas and this new agreement allows consumers the ability to order from Costco through Uber Eats across all of Canada, as well as 17 states in the US. We are also working to expand this partnership to several of our international countries in the coming months. In addition to the increased access to Uber Eats customers, the agreement will allow us to sell Uber gift cards globally and offer discounted Uber One Annual Membership to Costco members.
Finally, in terms of our upcoming releases, we will announce our May sales results for the four weeks ending Sunday, June 2 on Wednesday the June 5 after market close. Also remember that our fiscal fourth quarter ending September 1, 2024, will have 16 weeks versus the 17 weeks in the fiscal fourth quarter last year.
And with that, we will now open it up for Q&A.
