The U.S. economy is still grappling with an uneven recovery,
and companies are tussling to survive the downturn. Amid this
Costco Wholesale Corp
) has nearly succeeded in overcoming the hurdles, keeping an
upbeat note and sustaining its sales momentum.
Costco continues to be a dominant retail wholesaler, based on
the breadth and quality of merchandise it offers. The company's
strategy to sell products at heavily discounted prices has helped
it to remain on a positive growth track amid the beleaguered
economic conditions, as cash-strapped customers continue to see
it as a viable option for low-cost necessities.
Riding on Positive Comps
Costco is well positioned in the warehouse club industry,
having delivered positive comparable-store sales consistently so
far in 2013.
Costco has consistently registered comparable-store sales
growth from January to May. Within this period, comps growth
touched a low of 4% and hit a high of 6%, thereby recording an
average growth of approximately 4.6%. In the first five months of
2013, comps increased 4% in January, March and April, 6% in
February and 5% in May.
Given the current macroeconomic environment, monthly sales
data for Costco is also encouraging, reflecting consistent
growth. The company, within the span of January to May 2013,
registered sales growth in the range of 7%-8%, reflecting
average growth of approximately 7.2%. The company registered
sales growth of 7% in January, March, April and May, while
registering 8% growth in February.
What Drives Growth
A differentiated product range enables Costco to provide an
upscale shopping experience to its members, resulting in market
share gains and higher sales per square foot. Moreover, the
company continues to maintain a healthy membership renewal rate.
Costco also remains committed to open new clubs in domestic and
international markets. The company's diversification strategy is
a natural hedge against risks that may arise in specific
Costco's Zacks Rank
Costco currently carries a Zacks Rank #3 (Hold). Other stocks
worth considering in the retail sector include
Bon-Ton Stores Inc.
), both of which hold a Zacks Rank #1 (Strong Buy), and
J&J Snack Foods Corp.
), which carries a Zacks Rank #2 (Buy). These stocks are expected
to continue with their upbeat performances.
BON-TON STORES (BONT): Get Free Report
CONNS INC (CONN): Free Stock Analysis Report
COSTCO WHOLE CP (COST): Free Stock Analysis
J&J SNACK FOODS (JJSF): Free Stock Analysis
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