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Costco Wholesale Corporation’s (COST) sales fell in 1.8% in April as stay-at-home orders tied to the coronavirus pandemic left more shoppers at home.
Net sales slid 1.8% to $11.39 billion in the four weeks ended May 3 versus the year-ago period, even as e-commerce sales surged almost 86%. Same-store sales dropped 4.7% in April, including a 3.3% decline in U.S. same-store sales. In the thirty-five weeks ended May 3, net sales rose 7.8% to $107.64 billion year-on-year.
“Stay-at-home orders, social distancing restrictions and some mandatory closures led to decreased traffic and sales in our warehouses,” Costco said in a statement.
Costco said that limited service in its travel and food courts, closures of most of its optical, hearing aid and photo departments, as well as lower gas sales all “negatively impacted” April sales by an estimated 12 percentage points. The company added that about 70% of the impact was related to gas sales.
Costco shares have recovered from this year’s low at the end of March with the stock rising almost 10% to trade at $308.89 as of Wednesday.
Following the sales data, five-star analyst Peter Benedict at Robert W. Baird kept his Buy rating on the stock with a $335 price target noting that the decline was driven by "several temporal factors", including lower gas sales.
With steps being taken to gradually resume ancillary services and expectations that traffic and sales will improve, Benedict believes that last month's unique headwinds will dissipate in May.
Overall, Wall Street analysts have a Moderate Buy consensus rating on Costco’s stock based on 12 Buys and 6 Holds. The $331.18 average price target implies shares are slated to advance 7.2% in the coming 12 months. (See Costco stock analysis on TipRanks).
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