Costco's (COST) Comparable Sales Regain Momentum in July
Costco Wholesale Corporation’s COST growth strategies, better price management and decent membership trends have been contributing to its performance. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering decent sales numbers. Markedly, comparable sales rebounded in July after hiccups in June and May.
July Witnesses Remarkable Sales Performance
Costco’s net sales increased 4.5% to $17.60 billion for the retail month of July from $16.85 billion last year. The rate of growth accelerated from the improvements of 0.4% and 1.2% witnessed in June and May, respectively.
Comparable sales for the retail month of July — the four-week period ended Jul 30, 2023 — increased 2.5%. This followed declines of 1.4% and 0.3% experienced in June and May, respectively. Comparable sales for July reflect an improvement of 1.3%, 2.7% and 8.9% in the United States, Canada and Other International locations, respectively.
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Excluding the impacts of changes in gasoline prices and foreign exchange, comparable sales for the month under discussion rose 5% on improvements of 4.5%, 6.7% and 5.7% in the United States, Canada and Other International locations, respectively.
We note that Costco’s comparable e-commerce sales increased 4.1% year over year. Excluding the impact of gasoline prices and foreign exchange, the same rose 4% year over year.
Conclusion
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. We believe a favorable product mix, steady store traffic, pricing power and strong liquidity should benefit Costco.
We note that shares of this Zacks Rank #3 (Hold) company have advanced 12.7% in the past three months compared with the Retail – Discount Stores industry’s rise of 4.7%.
Bet Your Bucks on These 3 Hot Stocks
Here we have highlighted three better-ranked stocks, namely Grocery Outlet GO, Ross Stores ROST and Walmart WMT.
Grocery Outlet, an extreme value retailer of quality, name-brand consumables and fresh products, currently has a Zacks Rank #2 (Buy). The expected EPS growth rate for three to five years is 11.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales suggests growth of 9.6% from the year-ago period. GO has a trailing four-quarter earnings surprise of 13.7%, on average.
Ross Stores, which operates off-price retail apparel and home fashion stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 10.5%.
The Zacks Consensus Estimate for Ross Stores’ current financial-year sales and earnings suggests growth of 4.6% and 12.6%, respectively, from the year-ago reported numbers.
Walmart, which operates a chain of hypermarkets, discount department stores and grocery stores, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.5%.
The Zacks Consensus Estimate for Walmart’s current financial-year sales suggests growth of 4.2% from the year-ago period. WMT has a trailing four-quarter earnings surprise of 12%, on average.
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