Costco's (COST) Comparable Sales Increase in September

Zacks Equity Research Published on October 06, 2016

Costco Wholesale Corporation (COST - Free Report) registered an increase of 1% in comparable-store sales (comps) for the month of September (the five weeks ended Oct 2, 2016) following flat comps in August, a 2% decline in July and again flat comps in June. Comps for September reflect flat comps for the company’s U.S. and Other International locations and a 6% increase across the Canadian locations.

On the sales front, the company reported a 3% jump in net sales to $11.06 billion for the five weeks ended Oct 2, 2016.

Excluding the impact of foreign currency fluctuations and deflation in gasoline prices, Costco’s comps for the month under review rose 1%. The company recorded flat comps for its U.S. and Other International locations and a 5% increase across the Canadian locations.

Last week this, this warehouse club chain reported fourth-quarter fiscal 2016 results. Costco posted flat comps for the quarter. The company witnessed a 2% increase in comps across its Canadian locations, offset by a 1% and 2% decline registered at its U.S. and Other International locations.

Of late, Costco has been struggling with sluggish comps performance. While lower gasoline prices impacted U.S. comps, currency fluctuations adversely affected international comps. On the revenue front, this was the seventh consecutive quarter that the company has missed the Zacks Consensus Estimate. (Read: Costco Beats on Q4 Earnings, Misses on Revenue)

Costco, which competes with Wal-Mart Stores Inc. (WMT - Free Report) , currently operates 715 warehouses, which include 501 in the U.S. and Puerto Rico, 91 in Canada, 36 in Mexico, 28 in the U.K., 25 in Japan, 12 in Korea, 12 in Taiwan, 8 in Australia and 2 in Spain. The company plans to open about 9 new warehouses, including a relocation, before the end of this calendar year.

Zacks Rank

Costco carries a Zacks Rank #3 (Hold). Investors may consider better-ranked stocks such as Burlington Stores, Inc. (BURL - Free Report) and Big Lots Inc. (BIG - Free Report) both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Burlington Stores delivered an average positive earnings surprise of 16.1% over the trailing four quarters and has a long-term earnings growth rate of 18.4%.

Big Lots delivered an average positive earnings surprise of 8% over the trailing four quarters and has a long-term earnings growth rate of 13.4%.

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