Back to top

Image: Bigstock

Costco's (COST) Comparable Sales Display Strength in September

Read MoreHide Full Article

Costco Wholesale Corporation’s (COST - Free Report) growth strategies, better price management and decent membership trends have been contributing to its performance. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering decent sales numbers. Markedly, comparable sales continued to display strength in September.

September Registers Stellar Sales Performance

Costco’s net sales increased 6% to $22.75 billion for the retail month of September from $21.46 billion last year. This followed an improvement of 5% witnessed in August.

Comparable sales for the retail month of September — the five-week period ended Oct 1, 2023 — increased 4.5%. This followed an increase of 3.4% registered in August. Comparable sales for September reflect an improvement of 3.2%, 6.7% and 10% in the United States, Canada and Other International locations, respectively.

Excluding the impacts of changes in gasoline prices and foreign exchange, comparable sales for the month under discussion rose 3.7% on improvements of 2.7%, 8% and 4.9% in the United States, Canada and Other International locations, respectively.

We note that Costco’s comparable e-commerce sales increased 3.7% year over year. Excluding the impact of gasoline prices and foreign exchange, the metric rose 3.5% year over year.

Zacks Investment Research
Image Source: Zacks Investment Research

Membership Model, Key to Retail Success

Costco continues to be one of the dominant warehouse retailers based on the expanse and quality of merchandise offered. The company's distinctive membership business model and pricing power set it apart from traditional players. Membership fees increased 13.7% to $1,509 million in the fourth quarter of fiscal 2023.

Through a calculated approach that involves identifying untapped markets and tailoring offerings to meet customer preferences, Costco has managed to deepen its roots. This retail bellwether has been steadily expanding its footprint through new club openings in the domestic and international markets. Costco also operates e-commerce sites in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.

We believe a favorable product mix, membership growth, pricing power and strong liquidity should benefit Costco. Shares of this Zacks Rank #3 (Hold) company have advanced 17.7% in the past six months against the Retail – Discount Stores industry’s decline of 3%.

Bet Your Bucks on These 3 Hot Stocks

Here, we have highlighted three better-ranked stocks, namely Grocery Outlet (GO - Free Report) , Ross Stores (ROST - Free Report) and Walmart (WMT - Free Report) .

Grocery Outlet, an extreme value retailer of quality, name-brand consumables and fresh products, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 11.2% and 4.9%, respectively, from the year-ago reported numbers. GO has a trailing four-quarter earnings surprise of 14.3%, on average.

Ross Stores, which operates off-price retail apparel and home fashion stores, currently sports a Zacks Rank #1. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.

The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings indicates growth of 7.1% and 19.4%, respectively, from the year-ago reported numbers.

Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2 (Buy). WMT has a trailing four-quarter earnings surprise of 11.6%, on average.

The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings implies growth of 5% and 2.2%, respectively, from the year-ago reported numbers.

Published in