The holiday season ended on an upbeat note for
Costco Wholesale Corporation
), as the leading U.S. warehouse club operators posted robust
December comparable-store sales data that betters analysts'
expectations. Sales for the month were positively impacted by
inflation in gasoline prices and favorable foreign currency
After an increase of 6% in November, Costco's comparable-store
sales for December climbed 9%, reflecting comparable sales growth
of 8% at its U.S. locations and 10% at international outlets. In
the prior-year period, the company delivered comparable-store
sales growth of 7%.
In terms of performance, Costco fared far better than its
) that came up with flat comparable-store sales compared with a
1.6% increase in the prior-year period.
Costco's comparable-store sales for the 17-week period ended
December 30, 2012 rose 6% buoyed by a 6% and an 8% jump in
comparable-store sales in the U.S. and international locations,
Excluding the effects of gasoline prices and foreign currency
fluctuations, Costco's comparable-store sales for December rose
8% with U.S. and international comparable-sales elevating 8% and
6%, respectively. For the 17-week period, the company witnessed
comparable-store sales growth of 5%, with U.S. and international
sales rising by an equivalent percentage.
Total net sales for December surged 12% to $11.21 billion from
$10.05 billion in the year-ago period. Costco's sales for the
17-week period increased 9% to $34.42 billion from $31.68 billion
in the year-ago quarter.
The five-week period ended December 30, 2012 includes an
additional day compared with the prior-year period on account of
the timing of the New Year's holiday. This led to an increase of
approximately 2% in total and comparable sales.
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 opening new clubs in domestic
and international markets. The company's diversification strategy
is a natural hedge against risks that may arise in specific
However, Costco faces stiff competition from Target
Corporation and Sam's Club, a division of
Wal-Mart Stores Inc.
), which follows a similar business model that pushes through
high volumes of merchandise at low prices in membership-only
warehouse clubs. Thus, aggressive pricing to gain market share
and drive traffic amid stiff competition may depress sales and
Costco currently operates 622 warehouses, comprising 448
warehouses in the United States and Puerto Rico, 85 in Canada, 32
in Mexico, 23 in the United Kingdom, 13 in Japan, 9 in Taiwan, 9
in Korea, and 3 in Australia.
Currently, we maintain our long-term "Neutral" recommendation
on the stock. Moreover, Costco holds a Zacks #3 Rank that
translates into a short-term "Hold" rating.
COSTCO WHOLE CP (COST): Free Stock Analysis
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WAL-MART STORES (WMT): Free Stock Analysis
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