Richard A. Galanti
Executive Vice President, Chief Financial Officer at Costco Wholesale
Thank you, Sade, and good afternoon to everyone. 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.
In today's press release, we reported operating results for the first quarter of fiscal '22, the 12 weeks ended November 21. Net income for the quarter came in at $1.324 billion or $2.98 per diluted share compared to $1.166 billion or $2.62 per diluted share last year. This year included a tax benefit of $91 million or $0.21 this year related to stock-based compensation and a write-off of certain IT assets of $118 million pre-tax or $0.20 per share.
Last year included a tax benefit of $145 million or $0.33 per diluted share, $0.16 of which was due to the deductibility of the $10 per share special cash dividend received by the company's 401(k) plan participants and $0.17 related to stock-based compensation as well an incremental expenses for COVID-19 premium wages of $212 million pre-tax, which was a hit last year in the quarter of $0.35 per share.
Net sales for the quarter increased 16.7% to $49.42 billion, up from $42.35 billion a year earlier in the first quarter. Same-store sales for the first quarter were as follows; in the US, on a reported basis for the 12 weeks, up 14.9% and excluding gas inflation and the impacts of FX, up 9.9%. Canada reported 17.2% ex gas and FX plus 8.3%. Other international reported 13.4% ex gas and inflation and FX up 10.9%. All totaled, the company reported a 15% increase on a comp basis and 9.8% up ex gas and FX; and e-commerce which was reported at a 14.3%, ex FX was 13.3%.
In terms of Q1 comp sales metrics, traffic or shopping frequency increased 6.8% worldwide and at 5.9% in the US during the quarter. Our average transaction or ticket was up 7.7% worldwide and 8.5% in the US during the quarter. Excluding the positive impact from gas inflation and FX, the average ticket was up ex that plus 2.5% worldwide and plus 3.5% in the US. Foreign currencies relative to the US dollar positively impacted sales by about 90 basis points and gasoline price inflation positively impacted sales by approximately 430 basis points.
Next on the income statement. Membership fee income reported in the quarter, $946 million, up $85 million or 9.9% from last year's $861 million figure. Ex FX, the $85 million increase would have been $80 million and the 9.9% increase would be 9.3%. In terms of renewal rates at first quarter-end, our US and Canada rate came in at 91.6%, up 0.3% from the 12-week earlier figure at Q4 end, as well the worldwide rate came in at 89.0%, also up 0.3% from 12 weeks ago at Q4 quarter end -- at Q4 end. The renewal rates are continuing to benefit from more members auto renewing as well as increased penetration of executive members who on average renew at a higher rate than the non-executive members and first year renewal rates, which have improved a little.
In terms of number of members at the end of first quarter, in terms of member households as well as total cardholders, at Q1 end, total paid households was 62.5 million, up 800,000 from 61.7 a quarter ago and total cardholders 113.1 million, up a 1.5 million from the 111.6 million 12 weeks ago. At Q1 end, paid executive members totaled 26.5 million, an increase of 836,000 during the 12 weeks since Q4 end. The executive members represent 42% of our members and a little over 70% of our sales.
Moving down to the gross margin line. Our reported gross margin for the first quarter was lower year-over-year by 49 basis points and excluding gas inflation, lower year-over-year by 6 basis points. As I normally do, I ask you to jot down a few numbers. The two columns both reported year-over-year in Q1 and then without gas inflation year-over-year in Q1. First line item would be core merchandise minus 63 basis points year-over-year on a reported basis and minus 26 basis points without gas inflation. Ancillary and other businesses plus 2 basis points on a reported basis and plus 12 basis points ex gas -- to gas inflation. 2% reward, plus 3 basis point and minus 1 basis point. LIFO, minus 3 basis points in both columns, other, plus 12 basis points in both columns. Total then on a reported basis, margins were down 49 basis points year-over-year and ex gas inflation, down 6 basis points.
In terms of the core merchandise component of gross margin being lower by 63 basis points year-over-year and 26 basis points, ex gas inflation. Recall last year in Q1, the core reported was up 83 basis points and ex gas up 66 basis points. So, we've retained a good portion of the improvement from two years ago in the quarter. In terms of the core margin on their own sales, in the first quarter, our core on core margins were lower by 18 basis points with non-foods slightly up and food and sundries slightly lower year-over-year. Also lower year-over-year fresh foods was the primary driver of the core on core being lower in the quarter. Fresh continues to lapse -- to lap exceptional labor productivity and low product spoilage that occurred from the outsized sales that began a year -- that were -- that happened a year ago in the quarter.
Ancillary and other business gross margin was higher by 2 basis points on a reported basis and again, plus 12 basis points ex gas inflation. Gas and travel were better year-over-year as they anniversary a softer quarter a year ago, offset by e-comm, which was particularly strong a year ago and also related to the pandemic. LIFO, we had a 3 basis point or $14 million LIFO charge in the quarter. 2% reward, higher by 3 basis points on a reported basis and lower by 1 basis points, excluding gas inflation, a reflection of slightly higher sales penetration going to the increased number of executive members and other was up 12 basis points.
This is related to COVID-related costs from a year ago, that portion of the COVID related wages that go into the cost of sales, like our manufacturing businesses and our meat and bakery departments. Given the inflationary pressures and our ongoing efforts to mitigate price increases to our members in the face of inflation as best we can, our Q1 gross margins results, all in all I think were pretty good. Moving to SG&A. Our reported SG&A in the first quarter was lower or better year-over-year by 66 basis points and 29 basis points, excluding gas inflation. Again, jotting down two columns of numbers. First column being reported and the second column being ex gas inflation. Operations was better or lower by 40 basis points and ex gas inflation better or lower by 11 basis points.
Central reported better by 10 basis points without inflation -- gas inflation better by 6 basis points, stock compensation better by 2 basis points and worst by 1 basis points in the two columns, and other better by 14 basis points and better by 13 basis points year-over-year. Total then, again on a reported basis, our SG&A was better or lower by 66 basis points and ex gas inflation, lower or better by 29 basis points the. Keep in mind in terms of the core again, better by 40 basis points or better by 11 basis points ex gas inflation.
Keep in mind this result includes the permanent $1 an hour wage increase that began in March of 2021 and four weeks of additional starting wage increases that we just took this past October, going from $16 to $17 and from $16.50 to $18 for our two main categories of hourly employees. These latest changes in the starting wages went into effect October 25, just six weeks ago and four weeks of those six weeks are included in Q1. Central, that's -- no surprises there. Again, on an ex gas inflation basis better by 6 basis points. Stock comp as I mentioned a little better, a little worse by 1 basis points ex gas inflation and other, the 14 basis points and the 13 basis points numbers. This consistent with the COVID expense of $150 million -- $159 million last year and the $180 million write-off of the impacted IT assets that I mentioned earlier.
Next on the income statement is preopening expense. This year in the quarter $28 million, last year in the quarter $22 million or $6 million higher. All told, reporting -- operating income in the first quarter increased 18% coming in at $1.693 billion this year in the quarter compared to $1.43 billion last year. Below the operating income line, interest expense was $39 million each of the first quarters of fiscal '21 and '22. Interest income -- interest expense rather, interest income and other for the quarter was higher by $13 million year-over-year, primarily due to favorable FX. Overall reported pre-tax income in the first quarter was up 19% coming in at $1.696 billion this year compared in the first quarter last year of $1.42 billion.
In terms of income taxes, our tax rate in the first quarter of '22 was 20.7% compared to 16.8% in Q1 last year. Again, both years' tax rates benefited from the tax treatment of stock-based compensation as mentioned earlier, $91 million this year and $75 million last year in the quarter. Additionally, last year's tax rate benefited from the tax deductibility of a special dividend, that portion payable to the company's 401(k) plan participants. The fiscal '22, effective tax rate excluding these discrete items is currently projected to be between 26% and 27%.
A few other items of note. In terms of warehouse expansion, as you know, for fiscal '21, we opened 22 units including two relos. So, a net increase of 20 units during fiscal '21. And this quarter that ended a couple of weeks ago, we opened nine units, including one relo, so net openings of eight. For the remainder of the year, we plan to open 23 new units and also -- plan to open 23 units, four of which would be relocations. So, a net of 19 if all goes as planned. It's been a busy past seven days. We opened our second Costco in France last Saturday on December 4, followed by our second building in China, which opened yesterday, as well as two buildings opening this morning -- opening today, one in the US in Florida and our fourth unit in Spain.
Regarding CapEx, our first quarter fiscal '22 spend was approximately $1.05 billion. Our full year CapEx spend is estimated to be just about $4 billion. This would represent an increase of more than $400 million over last year's entire CapEx figure of $3.6 billion. The largest areas of increase coming from international spending for new warehouse expansion and increased investment in our logistics and e-comm fulfillment operations.
In terms of e-commerce, sales in the quarter, ex FX increased 13.3% year-over-year. That's of course on top of an 86% plus increase a year ago in the first quarter. Stronger departments in terms of year over percentages include jewelry, tires and home furnishings. Our largest merchandise department in terms of sales majors, which is everything from consumer electronics and TVs to appliances, et cetera, was up in the high-single digits, also on a very strong sales increase a year earlier.
In terms of an update on Costco Logistics, it continues to drive our big and bulky sales. For the quarter, Costco Logistics deliveries were up over 50% and now represent about 70% of our US e-comm big and bulky shipments. Average -- we've averaged during the quarter more than 50,000 stops per week. And for the year, we project more than 3 million stops, which would be anything from dropping something off to installing and taking away the old plans for logistics in the full year.
Our e-com mobile app. We continue to improve the site with additional features thus far as I've talked about the last few quarters of quarterly calls. We've redesigned the app header and footer, we've updated and improved the menu layout. Our members now have the ability to view warehouse receipts online via both the app and desktop. Our co-brand Citi Visa card is now linked -- it can now be linked to the digital membership card and can be used for payment.
Our members are now able to much more easily reschedule e-comm deliveries in the US and Canada. Same goes for rescheduling returns pickups and delivering in the first half of the new upcoming new calendar year, labelling -- a better labeling of fulfillment methods. Members can -- will be able to easily see fulfillment options, be at e-comm same day and even nearby warehouse availability of a particular item at a particular item level.
We're rolling out new e-com kiosks in the warehouse with video signage and easy touch screen ordering as well, we're rolling out e-commerce lockers. Currently in the US, we have 112 locations with more and we plan to more than double that number during calendar year 2022. In terms of e-commerce, there's a program that received some press yesterday -- just yesterday called Costco Next. In a way it's like our warehouse road shows, but online. Currently, there are 34 suppliers and growing, but it's still quite small, offering just under 1,000 items, curated items with Costco values, so please check it out when you have a chance.
From a supply chain perspective, similar issues that we outlined in 12 weeks ago on the last quarterly call. Each issue ebbs and flows a little bit. But overall, the factors pressuring supply chains and inflation include port delays, container challenges, COVID disruptions, shortages of various components, raw materials, ingredients, and even packaging supplies, labor cost pressures and truck and driver challenges. Overall, we feel we've dealt pretty well with the supply chain challenges in terms of delayed container arrivals on the Pacific Coast. About 79% of our import containers are late by an average of 51 days. A few percentage of those were actually a few days early and many of them are a few days more than 51 late.
Virtually, all departments are impacted. We've ordered early in many cases as I mentioned, I think on earlier calls, given the longer lead times, less product and packaging challenges, but still quite a bit. Still some limitations on key items, but improving again, it ebbs and flows. Chip shortage is still impacting many items, some more than others. In some instances, delayed inventory simply extends the season, an example might be lawn and garden and patio. As soon as the product arrives, it sells pretty quickly. But it may extend into beyond the normal seasonal time. Toys and seasonal, in fact, same thing, some inventory, in fact, won't make it before Christmas, but we've mitigated that as best as possible, and feel pretty good about it. In terms of moving on to -- despite all the supply chain issues, again, we're pretty -- feel pretty good about staying in stock and continuing to work to mitigate cost and price increases as best we can.
Moving on to inflation. Again, it's pretty much the same story that we told during each of the last two quarters. There have variety of inflationary pressures that we and others are seeing, from labor costs to freight costs to higher demand to container shortages and port delays to increase demand on certain product categories. Much of what you see and read out there. Our various shortages on everything from chips to oils and chemical supply by facilities hit by the Gulf store was a while back, our higher commodity prices.
For Q1 '22, and talking with our merchants, we estimate that overall year-over-year price inflation to be in the 4.5% to 5% range. That's a little bit higher of an estimated inflation rate that I discussed a quarter ago. But I think pretty consistent with what you read out there. All the said, much kudos to the job that our merchants and our traffic department and our operators have all been able to do in order to get the products that we need, pivot when and where necessary and keep our warehouses full while keeping prices low for our members and continuing to show value versus our competitors. Look I think overall this is best reflected in the operating results that we continue to achieve despite these many challenges.
Anecdotally on merchandising, holiday stuff has been strong, again, sometimes it depends on when the merchandise gets in. Baking items more people seem to be getting together are strong, gift cards are up dramatically from a year ago, but it was weak a year ago. Pet products as you might expect are strong with the benefit of increasing pet population over the past couple of years. Alcohol and spirits so far are strong, including gift boxes of various items. And of course, continued strength in consumer electronics, appliances, furniture and mattresses and the like. Apparel actually has enjoyed much stronger sales growth this year albeit compared to a relatively flat apparel sales a year ago.
One last comment. Our sustainability commitment website received a major refresh this week. So, please feel free to visit the site. It's linked directly from our homepage under the column About Us and then click on Sustainability Commitment. Finally, in terms of upcoming releases, we will announce our December sales results for the five weeks ending Sunday, January 2, on Wednesday, January 5 after market close.
With that I will open it up to questions and turn it back over to Sade. Thank you.
