Costco Wholesale Corp. (COST - Analyst Report) comparable-store sales results for March, the five weeks ended Apr 6, 2014, bettered analysts' expectations. The warehouse retailer delivered comparable-store sales growth of 5%, portraying an increase of 6% at the U.S. and 4% at international locations. Comps were favorably impacted by one extra day of sales in this period compared with the prior year due to the Easter timing.
Excluding the effect of deflation in gasoline prices and adverse impact of foreign currency fluctuations, Costco’s comparable-store sales for March rose 7%, reflecting comparable sales growth of 6% at its U.S. locations and 9% at international outlets.
Most of the retailers continue to grapple with cold weather in March that resulted in sluggish demand for spring merchandise. Retailers are still reeling under margin pressure due to promotional activities they undertook during a soft holiday season followed by adverse weather conditions in January and February. Moreover, a shift in Easter holiday to Apr 20 this year compared with Mar 31 last year also subdued March sales.
Retailers such as L Brands, Inc. (LB - Analyst Report), The Gap, Inc. (GPS - Analyst Report) and Zumiez, Inc. (ZUMZ - Analyst Report) saw their comparable-store sales declining 1%, 6% and 2.9%, respectively during March.
Coming to Costco, comparable-store sales for the 31-week period ended Apr 6, 2014, 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 5%. Comps increased 5% at the U.S. and 7% at international locations.
Total net sales for March rose 8% to $10.43 billion from $9.67 billion in the year-ago period. Costco’s net sales for the 31-week period increased 6% to $64.65 billion from $61.02 billion in the year-ago period.
Costco currently operates 650 warehouses, comprising 462 in the United States and Puerto Rico, 87 in Canada, 33 in Mexico, 25 in the United Kingdom, 19 in Japan, 10 in Taiwan, 9 in Korea, and 5 in Australia.
Currently, Costco carries a Zacks Rank #4 (Sell), indicating lower-than-expected results in the past quarters. In the trailing four quarters, it missed the Zacks expectation by an average of 5.5%.
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