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Costco's (COST) Solid Comps Run Helps Lift Stock 10% YTD

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Strong labor market, rising disposable income, elevated consumer sentiment and strategic efforts are working in tandem for Costco Wholesale Corporation (COST - Free Report) . The company continued with stellar comparable sales (comps) performance, as evident from its May sales results. Comps for four-week ended Jun 3, 2018 increased 11.7%, following an advance of 10.9% in April, 8.6% in March, 10.5% in February and 6% in January.

While major chains are grappling with sluggish store and mall traffic as consumers switch to online shopping, Costco seems somewhat resilient to the tough retail landscape. We note that traffic rose 5.1%, while average front-end transaction jumped 4.9% during the third quarter of fiscal 2018.

Cumulatively, these helped this Zacks Rank #3 (Hold) stock to rise roughly 9.5% so far in the year shares, almost in line with the industry. You can see the complete list of today’s Zacks #1 Rank stocks here.

The company generated net sales of $11.02 billion in the month of May, up 14.1% year over year. Notably, net sales have jumped 13.1%, 10.9%, 12.8% and 8.4% in the months of April, March, February and January, respectively.

Comps for May reflect an increase of 11.7%, 13% and 9.4% at the United States, Canada and Other International locations, respectively. Excluding the impact of foreign currency fluctuations and gasoline prices, Costco’s comps for the month under review rose 8%. The company recorded comps increase of 8.7%, 5.4% and 7.4% at the United States, Canada and Other International locations, respectively.

Costco Wholesale Corporation Price, Consensus and EPS Surprise

 

Costco Wholesale Corporation Price, Consensus and EPS Surprise | Costco Wholesale Corporation Quote

For the 39-week period, Costco reported 9.7% jump in comps, displaying an increase of 9%, 10.7% and 12.6% at the United States, Canada and Other International locations, respectively. Net sales for the period came in at $103.26 billion, an increase of 12.1% from the year-ago period.

We noted that the company’s e-commerce comparable sales surged 34.4% in the month under review. This signals that its efforts to drive online sales bode well. With the wave of digital transformation hitting the sector, retailers are fast adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in-stores. Costco, which shares space with Walmart (WMT - Free Report) , Amazon (AMZN - Free Report) and Target (TGT - Free Report) , is no exception to this trend.

Costco operates 750 warehouses, comprising 520 warehouses in the United States and Puerto Rico, 98 in Canada, 38 in Mexico, 28 in UK, 26 in Japan, 14 in Korea, 13 in Taiwan, nine in Australia, two in Spain, one in Iceland and one in France. It is also gradually expanding e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea and Taiwan.

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