Costco Wholesale Corporation
) looks unfazed by the soft recovery in the U.S. economy. The
company has managed to keep an upbeat note and sustain its sales
momentum amid heightened competition to grab a bigger share of the
Costco continues to be a dominant retail wholesaler, based on
the breadth and quality of the merchandise it offers. The company's
strategy to sell products at heavily discounted prices has helped
it to remain on a growth track, 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
Costco, which faces stiff competition from
) and Sam's Club, a division of
Wal-Mart Stores Inc.
), has consistently registered comparable-store sales growth from
January to June. Within this period, comps growth touched a low of
2% and hit a high of 6%, thereby recording an average growth of
approximately 4.7%. In the first six months of 2014, comps
increased 4% in January, 2% in February, 5% in March and April, and
6% in May and June each.
Given the current macroeconomic environment, monthly sales data
for Costco is also encouraging, reflecting consistent growth. The
company, within the span of January to June, registered sales
growth in the range of 4%-10%, reflecting average growth of
approximately 7.2%. The company registered sales growth of 6% in
January, 4% in February, 8% in March, 7% in April, 8% in May and
10% in June.
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 markets.
Costco's Zacks Rank
Costco currently carries a Zacks Rank #3 (Hold). A better-ranked
stock worth considering in the retail sector is
Big Lots Inc.
),which holds a Zacks Rank #2 (Buy).
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