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Costco (COST) Thrives on Stellar Comparable Sales Trend

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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. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering impressive sales numbers.

Decent Sales Run

Costco’s net sales increased 15.8% to $19.50 billion for the retail month of September — the five-week period ended Oct 3, 2021 — from $16.84 billion in the last year. This followed an improvement of 16.2%, 16.6% and 16.9% in August, July and June, respectively.

One of the widely recognized names in the Retail – Discount Stores industry, Costco has been providing its members with quality goods and services. The company, which is among the biggest winners amid the pandemic, sells products at discounted prices to draw customers, who have been seeking both value and convenience.

Stellar Comps Performance

Costco’s comparable sales for September jumped 14.3%. This followed an increase of 14.2%, 13.8% and 14.1% in August, July and June, respectively. Comparable sales for September reflect an improvement of 14.6%, 14.9% and 12% 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 9.4% on improvements of 10%, 7.3% and 8% in the United States, Canada and Other International locations, respectively.

E-Commerce Sales Rise

Costco has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, both online or at stores. The company has been gradually expanding its e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan, and Australia. We note that e-commerce comparable sales rose 10.6% in September. This followed increases of 2.8%, 7.4% and 20.8% in August, July and June, respectively.

To drive its online sales, the company in collaboration with Uber Technologies had earlier launched a grocery delivery pilot in 25 locations across Texas. This allows members to get their on-demand grocery delivery within hours with Uber and Uber Eats mobile apps. Again, Costco Logistics has boosted e-commerce capabilities and facilitated selling of "big and bulky" items. We note that Costco Logistics sales represented 24% of e-commerce sales in the final quarter of fiscal 2021.

Closing Thoughts

Costco continues to be one of the dominant warehouse retailers based on the expanse and quality of merchandise offered. It is focused on ramping up investments in the wake of the rising competition from the likes of Walmart (WMT - 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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