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Costco’s Stellar Comps Run & Price Management to Fuel Sales

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In the evolving retail ecosystem, Costco Wholesale Corporation COST has been able to create a niche for itself on the back of growth strategies, better price management, strong membership trends and increasing penetration of e-commerce business. Certainly, these helped the company to continue with its impressive comparable sales (comps) run.

Definitely, improving job prospects, rising disposable income and upsurge in consumer confidence have also aided the performance of this membership warehouse operator. Notably, comps for the month of August rose 9.2%, following an advance of 8.3% in July, 9.7% in June, 11.7% in May, 10.9% in April, 8.6% in March, 10.5% in February and 6% in January.

Comps for August reflect an increase of 11.3%, 2.7% and 5.3% at the United States, Canada and Other International locations, respectively. Excluding the impact of foreign currency fluctuations and gasoline prices, comps for the month under review rose 8%. The company recorded comps increase of 8.9%, 4.8% and 6.8% at the United States, Canada and Other International locations, respectively.

Notably, the company generated net sales of $11 billion in the month of August, up 12.2% year over year. Meanwhile, net sales have improved 10.1%, 11.7%, 14.1%, 13.1%, 10.9%, 12.8% and 8.4% in the months of July, June, May, April, March, February and January, respectively.

Costco also informed that net sales for the fourth quarter of fiscal 2018 grew 5% to $43.4 billion. Comps improved 9.5% during the quarter under review, representing an increase of 10.8%, 5.7% and 6.7% at the United States, Canada and Other International locations, respectively.

Costco seems somewhat unfazed by the tough retail scenario. While major chains are grappling with sluggish store and mall traffic as consumers switch to online shopping, this Issaquah, WA-based company seems rather resilient to the challenging retail backdrop.

Costco Wholesale Corporation Price, Consensus and EPS Surprise

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


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, Target TGT and Ross Stores ROST, is no exception to this trend.

It is also steadily expanding e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea and Taiwan. E-commerce comparable sales advanced 23.8% in the month of August and 26.2% during the final quarter of fiscal 2018.

Cumulatively, these have helped this Zacks Rank #3 (Hold) stock to climb roughly 18% in the past three months, comfortably outperforming the industry’s increase of 14%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Costco operates 762 warehouses, comprising 527 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 28 in the U.K., 26 in Japan, 15 in Korea, 13 in Taiwan, 10 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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