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Costco's Stellar Performance Continues in June, Sales Up 11%

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Costco Wholesale Corporation’s (COST - Free Report) net sales shot up again in the month of June. We note that net sales surged 11.1% to $16.18 billion during the five-week period ended Jul 5, 2020 from $14.57 billion in the year-ago period. This followed an increase of 7.5% in the month of May. Notably, net sales had improved for the second straight month, after declining 1.8% in April on account of stay-at-home orders, social distancing and some mandatory closures that resulted in lower traffic and soft sales at warehouses.

It is quite clear that the company’s growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have contributed to the performance. Cumulatively, these factors helped this operator of membership warehouses in registering impressive comparable sales run.

Costco’s comparable sales for the month of June rose 11.5%. This followed an increase of 5.4% in May and a decline of 4.7% in April. The monthly comparable sales reflected an increase of 11%, 8.4% and 18% in the United States, Canada and Other International locations, respectively.

Excluding the impacts from change in gasoline prices and foreign exchange, comparable sales for the month under discussion rose 14.4% with an improvement of 13.6%, 12.2% and 22.1% in the United States, Canada and Other International locations, respectively.
This Issaquah, WA-based company’s e-commerce sales have been showcasing a sharp increase with large number of Americans still preferring online shopping on fears of contracting the deadly coronavirus. E-commerce comparable sales soared 85.8% during the month of June. This follows an increase of 106.2%, 85.7% and 48.3% in the months of May, April and March, respectively.

With the prevailing trend of digital transformation in the sector, retailers are rapidly adopting the omni-channel mantra to provide a seamless shopping experience online and in stores. Costco, which shares space with Walmart (WMT - Free Report) , Amazon (AMZN - Free Report) and Target (TGT - Free Report) , is also following the trend. Costco operates e-commerce sites in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.

To drive its online sales, the company launched CostcoGrocery to deliver non-perishable items to buyers’ homes. It acquired Innovel Solutions, a leading provider of third-party end-to-end logistics solutions. The buyout bolsters Costco’s e-commerce capabilities and facilitate sales of "big and bulky" items.

To Conclude

Costco continues to be one of the dominant warehouse retailers based on the breadth and quality of merchandise offered. In fact, its strategy of selling products at heavily discounted prices has helped it to remain on growth track. Additionally, a differentiated product range enables it to provide an upscale shopping experience for members.

Notably, shares of this Zacks Rank #3 (Hold) company have rallied approximately 16.6% in a year compared with the industry’s growth of 10%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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