Despite a challenging environment, Costco Wholesale Corporation’s (COST - Analyst Report) comparable-store sales results for October betters analysts' expectations. The company delivered comparable-store sales (comps) growth of 3%, portraying an increase of 4% at the U.S. and 3% at international locations.
Excluding the effect of gasoline prices and foreign currency fluctuations, Costco’s comparable-store sales for October rose 6%, reflecting comparable sales growth of 5% at its U.S. locations and 7% at international outlets.
On the whole, retailers came up with better sales results for the month of October, amid an environment that grappled with a 16-day government shutdown, an uncertain economic recovery and soft job opportunities. Retailers spent more on promotions and came up with lucrative discounts to drive traffic. However, heavy discounts raise concerns about margins.
Apparel retailer, Stein Mart Inc. impressed analysts by posting a 5.4% rise in comps, while The Gap, Inc. (GPS - Analyst Report), witnessed a 4% increase in comps. L Brands, Inc. , the specialty retailer of women’s intimate and other apparel, beauty and personal care products, reported comps growth of 8% for the month of October.
Coming to Costco, comparable-store sales for the 9-week period increased 3%, buoyed by 4% growth at the U.S. and 1% increase at international locations. Excluding the effect of gasoline prices and foreign currency fluctuations, Costco’s comparable-store sales for the period jumped 6%. Comps increased 5% at the U.S. and 6% at international locations.
Total net sales for October rose 6% to $8.15 billion from $7.66 billion in the year-ago period. Costco’s net sales for the 9-week period increased 6% to $18.01 billion from $17.00 billion in the year-ago period.
Costco currently operates 642 warehouses, comprising 457 in the United States and Puerto Rico, 86 in Canada, 34 in Mexico, 25 in the United Kingdom, 18 in Japan, 10 in Taiwan, 9 in Korea and 3 in Australia. The company plans to open 7 more new warehouses before this calendar year ends.
Currently, Costco carries a Zacks Rank #3 (Hold).