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Costco's (COST) Sturdy Sales Run Continues in December

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Costco Wholesale Corporation’s (COST - Free Report) growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its upbeat performance. Thanks to its status of essential retailer, this Issaquah, WA-based company has been benefiting from the coronavirus-induced spike in demand. Cumulatively, these factors have been aiding this operator of membership warehouses in registering impressive sales numbers.

We also note that shares of this Zacks Rank #3 (Hold) company have advanced approximately 27% in the past year compared with the industry’s rally of 23.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Solid Sales Run Continue

Notably, Costco registered an increase of 12.3% in net sales to $19.14 billion during the five-week period ended Jan 3, 2021. This followed an improvement of 15.1%, 15.9% and 16.9% in the months of November, October and September, respectively.

The company’s strategy to sell products at discounted prices has helped it expand customer base. Under the current circumstances, people are exhibiting a preference for discount stores for essentials or other daily purchases. Apparently, Costco has emerged as viable option for them. The company’s differentiated product range resonates well with customers’ spending habits.

Impressive Comps Performance

Impressively, Costco’s comparable sales for the month of December rose 10.7%. This followed an increase of 13.4%, 14.4% and 15.5% in the months of November, October and September, respectively. The monthly comparable sales reflect an increase of 9.6%, 8% and 19.4% 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 10.9% on an improvement of 11%, 5.7% and 15.8% in the United States, Canada and Other International locations, respectively.

Online Sales: A Key Catalyst

Undoubtedly, Costco has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether online or at stores. Consumers’ increased shift to online purchasing owing to the coronavirus outbreak seems to have worked in favor of the company.

The company’s e-commerce sales have been showcasing a sharp increase courtesy of the rising stay-at-home trend to maintain social distance amid the pandemic. We note that e-commerce comparable sales soared 62.5% during the month of December. This followed an increase of 71.3%, 91.1% and 90.3% in the months of November, October and September, respectively. Costco operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia.

Bottom Line

Costco continues to be one of the dominant warehouse retailers based on the expanse and quality of merchandise offered. It is also focused on ramping up investments in the wake of rising competition from the likes of Dollar Tree (DLTR - Free Report) , Dollar General (DG - Free Report) and Target (TGT - Free Report) . We believe that the company’s business model and commitment toward opening membership warehouses will continue to drive traffic.

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