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Costco (COST) Displays Resilience in Comparable Sales Success
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Costco Wholesale Corporation (COST - Free Report) , a stalwart in the realm of consumer defensive stocks, continues to weather the market's turbulence with resilience. The company's robust growth strategies, effective price management and loyal membership base have been instrumental in sustaining its impressive performance. These factors have contributed to Costco's consistent success in achieving strong sales figures.
Digging Into Comparable Sales
Costco’s comparable sales for the retail month of October — the four-week period ended Oct 29, 2023 — increased 3%. This followed an increase of 4.5% and 3.4% registered in September and August, respectively. Comparable sales for October reflect an improvement of 1.1%, 8.5% and 8.2% 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 3.4% on improvements of 2.2%, 9.5% and 4.1% 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 3.1% year over year.
Costco’s net sales increased 4.5% to $18.53 billion for the retail month of October from $17.73 billion last year. This followed an improvement of 6% and 5% witnessed in September and August, respectively.
Image Source: Zacks Investment Research
Growing Membership Base
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. The company ended the quarter with 71 million paid household members.
We expect Costco’s total paid members to be approximately 73.4 million at the end of fiscal 2024, representing an increase of 3.4% from fiscal 2023. We also estimate a 3.7% jump in net sales and a 3.6% rise in total membership fees for fiscal 2024. These translate into an estimated revenue improvement of 3.7% for the fiscal year.
Wrapping Up
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 #2 (Buy) company have advanced 14.1% in the past six months against the Retail – Discount Stores industry’s decline of 1.3%.
The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 7.5% and 19.6%, respectively, from the year-ago reported numbers. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2.
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. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings implies growth of 5% and 2.4%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.
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Costco (COST) Displays Resilience in Comparable Sales Success
Costco Wholesale Corporation (COST - Free Report) , a stalwart in the realm of consumer defensive stocks, continues to weather the market's turbulence with resilience. The company's robust growth strategies, effective price management and loyal membership base have been instrumental in sustaining its impressive performance. These factors have contributed to Costco's consistent success in achieving strong sales figures.
Digging Into Comparable Sales
Costco’s comparable sales for the retail month of October — the four-week period ended Oct 29, 2023 — increased 3%. This followed an increase of 4.5% and 3.4% registered in September and August, respectively. Comparable sales for October reflect an improvement of 1.1%, 8.5% and 8.2% 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 3.4% on improvements of 2.2%, 9.5% and 4.1% 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 3.1% year over year.
Costco’s net sales increased 4.5% to $18.53 billion for the retail month of October from $17.73 billion last year. This followed an improvement of 6% and 5% witnessed in September and August, respectively.
Image Source: Zacks Investment Research
Growing Membership Base
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. The company ended the quarter with 71 million paid household members.
We expect Costco’s total paid members to be approximately 73.4 million at the end of fiscal 2024, representing an increase of 3.4% from fiscal 2023. We also estimate a 3.7% jump in net sales and a 3.6% rise in total membership fees for fiscal 2024. These translate into an estimated revenue improvement of 3.7% for the fiscal year.
Wrapping Up
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 #2 (Buy) company have advanced 14.1% in the past six months against the Retail – Discount Stores industry’s decline of 1.3%.
3 More Stocks Looking Red Hot
Here, we have highlighted three other top-ranked stocks, namely The TJX Companies (TJX - Free Report) , Ross Stores (ROST - Free Report) and Walmart (WMT - Free Report) .
TJX Companies, which operates as an off-price apparel and home fashion retailer, currently has a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for TJX Companies’ current financial-year sales and earnings suggests growth of 7.5% and 19.6%, respectively, from the year-ago reported numbers. TJX has a trailing four-quarter earnings surprise of 6.6%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2.
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. ROST has a trailing four-quarter earnings surprise of 11.4%, on average.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for Walmart’s current financial-year sales and earnings implies growth of 5% and 2.4%, respectively, from the year-ago reported numbers. WMT has a trailing four-quarter earnings surprise of 11.6%, on average.