Costco continues to be a dominant retail wholesaler based on the
breadth and quality of the merchandises it offers. Having delivered
consistent comps growth, it is well positioned in the warehouse
club industry. Costco's first-quarter fiscal 2015 results also hint
the same, wherein top-line grew 7.4% to $26,866 million, and also
came ahead of the Zacks Consensus Estimate. The quarterly earnings
came in at $1.12 per share outperforming the Zacks Consensus
Estimate by 2.8% and surging 16.7% from the prior-year period. This
is the second consecutive quarter that the company has registered
positive earnings surprise, after witnessing four consecutive
quarters of earnings miss. However, we remain apprehensive if the
company adopts aggressive pricing to counter competition, gain
market share and drive traffic, as this may depress margins.
Currently, we stay Neutral on the stock.
Based in Issaquah, Washington, Costco Wholesale Corporation,
(formerly Costco Companies Inc.) sells high volumes of foods, and
general merchandise (including household products and appliances)
at discounted prices through membership warehouses. It is the
largest warehouse club operator in the U.S. The company's
warehouses offer an array of low-priced nationally branded and
select private labeled products in a wide range of merchandise
categories. Costco offers three types of memberships to its
customers: Business, Gold Star (individual), and Executive.
As of December 10, 2014, Costco operates 671 warehouses,
comprising 474 warehouses in the United States and Puerto Rico, 88
in Canada, 34 in Mexico, 26 in the United Kingdom, 20 in Japan, 11
in Korea, 10 in Taiwan, 7 in Australia and 1 in Spain.
Costco generates revenue from two sources: 1) Store sales and 2)
Membership fees and other revenue (MFI). Store sales accounted for
98% of fiscal 2014 revenue with MFI represented the remaining
Costco offers myriad varieties of food products as well as a
vast range of household and lifestyle products, stationeries and
appliances. The company also sells gasoline to customers at cheap
prices. The company's products are classified under six broad
merchandise categories, namely, 1) Sundries (including candy, snack
foods, tobacco, alcoholic and nonalcoholic beverages), 2) Hardlines
(including major appliances, electronics, health and beauty aids,
hardware, office supplies), 3) Food (including dry and
institutionally packaged foods), 4) Softlines (including apparel,
domestics, jewelry, housewares, media, home furnishings, cameras),
5) Fresh Food (including meat, bakery, deli and produce) and 6)
Ancillary and Other (including gas stations, pharmacy, food court,
optical, one-hour photo, hearing aid and travel).
Costco Wholesale Corporation (COST): Read the Full
Want the latest recommendations from Zacks Investment Research?
Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report
COSTCO WHOLE CP (COST): Free Stock Analysis
To read this article on Zacks.com click here.