How Market Reacted to Costco's Comps Results? - Analyst Blog


There was a mixed reaction on Costco Wholesale Corporation 's ( COST ) comparable-store sales results for December. While shares of this warehouse retailer dropped 0.6% or 66 cents during the last trading session, it witnessed a marginal improvement of 3 cents during after-market trading hours.

Investors might have been apprehensive due to lower-than-expected holiday sales data pouring in from other retailers but gradually gained confidence on Costco's better-than-expected performance.

Despite a challenging consumer environment, Costco's comparable-store sales results for December better analysts' expectations. The company delivered comparable-store sales growth of 3%, portraying an increase of 5% at the U.S. and 1% at international locations.

Excluding the effect of deflation in gasoline prices and adverse impact of foreign currency fluctuations, Costco's comparable-store sales for December rose 5%, reflecting comparable sales growth of 5% at its U.S. locations and 7% at international outlets. 

The holiday season was a tough one, while some make their way out, others struggled to lure budget-constrained consumers. Consumer spending environment was not very convincing, and bargain hunters went from one shop to another to grab the best deal.

American Eagle Outfitters Inc. ( AEO ) reported disappointing net sales and comparable-store sales results for the nine weeks ending Jan 4, 2014. Sales dipped 2%, while comps slipped 7%. Sears Holdings Corporation 's ( SHLD ) announced one of its most disappointing holiday season sales results. Total domestic comparable-store sales for the nine-week period ended on Jan 6, 2014, declined 7.4%.

However, Macy's, Inc. ( M ) emerged strong during the holiday season, posting comparable-store sales increase of 3.6% for the November and December period collectively, while including departments licensed to third parties, comps rose 4.3%.

Coming to Costco, comparable-store sales for the 18-week period increased 3%, buoyed by 4% growth at the U.S. and 1% increase at international locations. Excluding the effect of gasoline prices and foreign currency fluctuations, Costco's comparable-store sales for the period jumped 5%. Comps increased 4% at the U.S. and 7% at international locations.

Total net sales for December rose 6% to $11.53 billion from $10.87 billion in the year-ago period. Costco's net sales for the 18-week period increased 6% to $38.33 billion from $36.26 billion in the year-ago period.

Costco currently operates 648 warehouses, comprising 461 in the United States and Puerto Rico, 87 in Canada, 33 in Mexico, 25 in the United Kingdom, 18 in Japan, 10 in Taiwan, 9 in Korea, and 5 in Australia.

Currently, Costco carries a Zacks Rank #4 (Sell).

AMER EAGLE OUTF (AEO): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AEO , COST , M , SHLD

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