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Costco Stays Ahead of Industry, Up More Than 20% in a Year

Zacks Equity Research

Costco Wholesale Corporation COST has surged 27.4% in a year, comfortably outpacing the industry’s rally of 20.9%. This Zacks Rank #2 (Buy) company has also outperformed the Retail-Wholesale sector that grew a meager 3.5% during the aforementioned period. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the evolving retail ecosystem, Costco 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 factors have aided the company in sustaining its impressive comparable sales (comps) run. Moreover, favorable job picture, rising wages and improved consumer sentiment are other important factors behind the upsurge.

Notably, comps for the month of February 2019 rose 3.5%, following an advance of 5.2% in January 2019, and 6.1% in December, 9.2% in November and 8.6% in October 2018. Meanwhile, net sales improved 5% in the month of February, following an increase of 8%, 7.8%, 9.8% and 10.6% in the months of January, December, November and October, respectively.

Costco is committed toward ramping up investments in the wake of rising competition from the likes of Dollar Tree DLTR, Dollar General DG and Ross Stores ROST. We believe that the company’s business model and commitment toward opening membership warehouses will continue to drive traffic.

With the wave of digital transformation hitting the sector, Costco is fast adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in-stores. It is steadily expanding e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea and Taiwan. E-commerce comparable sales rose 24.2% in the month of February, following an increase of 22.1%, 13.6% and 46.1% in the months of January, December and November, respectively.

Costco continues to be one of the dominant warehouse retailers based on the breadth and quality of merchandise offered. In fact, its strategy of selling products at heavily discounted prices has helped it to remain on growth track.

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Ross Stores, Inc. (ROST) : Free Stock Analysis Report
Dollar General Corporation (DG) : Free Stock Analysis Report
Dollar Tree, Inc. (DLTR) : Free Stock Analysis Report
Costco Wholesale Corporation (COST) : Free Stock Analysis Report
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