Costco's (COST) Comparable Sales Run Continues in January
Costco Wholesale Corporation’s COST growth strategies, better price management and decent membership trends have been contributing to its upbeat performance. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering impressive sales numbers.
Comparable Sales Accelerate
Comparable sales for the retail month of January — the four-week period ended Jan 29, 2023 — jumped 5.6%. This followed increases of 5.5% and 4.3% in December and November 2022, respectively. Comparable sales for January reflect an improvement of 6.6%, 2.4% and 3.9% in the United States, Canada and Other International locations, respectively.
Management highlighted that the occurrence of the Lunar New Year 10 days earlier this year hurt January’s Other International and total sales by roughly 2% and 0.25%, respectively. The Chinese New Year was on Jan 22 this year.
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Excluding the impacts of changes in gasoline prices and foreign exchange, comparable sales for the month under discussion rose 7.4% on improvements of 6.9%, 8.9% and 8.7% in the United States, Canada and Other International locations, respectively.
We note that Costco’s comparable e-commerce sales fell 15.4% year over year. Excluding the impact of gasoline prices and foreign exchange, the same declined 14.4% year over year.
Impressive Sales Performance
Costco’s net sales increased 6.9% to $16.84 billion for the retail month of January from $15.76 billion in the last year. This followed improvements of 7% and 5.7% in December and November 2022, respectively.
One of the widely recognized names in the industry, Costco has been providing its members with quality goods and services. The company, which is among the biggest winners amid the pandemic, sells products at discounted prices to draw customers, who have been seeking both value and convenience amid rising prices.
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 appreciated 6.5% in the past three months compared with the Retail – Discount Stores industry’s growth of 7.9%.
3 Picks You Can’t Miss Out On
Here we have highlighted three better-ranked stocks, namely Casey's General Stores CASY, Albertsons Companies ACI and Arhaus ARHS.
Casey's, one of the leading convenience store chains in the United States, carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Casey's current financial-year sales and EPS suggests growth of 23.1% and 18.4%, respectively, from the year-ago period. Casey's has a trailing four-quarter earnings surprise of 7.2%, on average.
Albertsons, a leading food and drug retailer in the United States, currently carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 5.4%.
The Zacks Consensus Estimate for Albertsons’ current financial-year revenues and EPS suggests growth of 7.8% and 5.2%, respectively, from the year-ago reported figure. Albertsons has a trailing four-quarter earnings surprise of 17.2%, on average.
Arhaus, which operates as a lifestyle brand and premium retailer in the home furnishings market, carries a Zacks Rank #2. The expected EPS growth rate for three to five years is 16.1%.
The Zacks Consensus Estimate for Arhaus’ revenues and EPS suggests growth of 54% and 26.1%, respectively, from the year-ago reported figure. Arhaus has a trailing four-quarter earnings surprise of 112%, on average.
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