than expected. But, for the first time in six years, Matty, same-store sales were flat.

Matt Argersinger: Right. I was trying to figure out what investors actually liked about this

report. Comps were flat. If you strip out foreign currency, gas sales, okay, up 3%.

But overall revenue up just 2.5%, really only because they're opening new stores. Profit’s

up 6%, a little better than expected. But these aren't exactly the growth numbers that,

in my view, justify a P/E of 30. Jeff Fischer: Such a hater.

Argersinger: I know. My only guess is that the traditional retail industry has been so

bad over the last six to nine months that Costco's slightly better than expected results

is getting it some love.

Ron Gross: Did they talk about retention at all? Are they seeing any slippage there?

Argersinger: There's no slippage of retention. I'll point out that they had better than expected

membership fee growth, which, of course, is a pillar of the business. So that's probably

giving it a little bit of a boost.

Hill: Six years of same-store sales growth, that's phenomenal, and that was bound to end

at some point. I think the question, Ron, becomes, three months from now, if we're looking

at this same number again, then it's no longer a speed bump. Then it's actually a point of concern.

Gross: I think that's fair. But as Matty pointed out, I don't really think it's as bad as it

looks because of foreign currency and because of gasoline. I think the numbers are still

pretty solid. Perhaps not as robust as they used to be, but they're still opening new

stores, they're growing on a per-store basis, retention is still good, you still have the

model working. And I'll add that you're probably ripe for another rise to the membership fee

at some point, which is another level they can pull, assuming the economy and the member

base are strong enough, so we can see some growth there.

Argersinger: There's also been a shift now moving to the new credit card, which, we'll

see. That could either be a good thing and lead to a lot of growth membership, or it

could not. We'll have to see.

Fischer: I have a question for you two guys, who I know follow Costco closely. Does management

talk about Amazon much at all in conference calls?

Hill: Would you, if you were Costco? (laughs) No!

Argersinger: Costco doesn't really mention Amazon by name. But they talk a lot about

their own ecommerce efforts, which are, on a relative basis, doing quite well. And they

have, of course, a relationship with Boxed, which is working out.

Gross: You can -- as you can with Amazon, not to this extent -- buy a lot of junk, an

amazing assortment, you can buy online as well. I've bought some interesting things myself.

Fischer: I would just think, overtime, Amazon will eat into that. Even Costco's business

is vulnerable with subscribe and save on Amazon and all the Prime members.

Argersinger: Pantry deals, that kind of thing.

Fischer: Exactly. We're buying more and more of those basics from Amazon themselves.

Gross: But, in like a Best Buy, where we say Best Buy is really just a showroom for Amazon,

I don't think you'll ever say that about Costco. You're going to Costco, you're leaving with

a cart full of stuff. If you're going to make that effort--

Fischer: If you're Ron.

Gross: (laughs) I don't think you're going to see, say, seven dozen pieces of licorice

and say, "I'm going to go buy it on Amazon." You're going to walk out with it.

Fischer: Yeah, but they could just not go to Costco, period.