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Costco (COST) Takes Lead, Stays Ahead of Industry in 6 Months

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Costco Wholesale CorporationCOST has surged 27.8% in the past six months compared with the industry 's growth of 23.6%. This Zacks Rank #3 (Hold) company has also comfortably outperformed the Retail-Wholesale sector that advanced 11% during the aforementioned period. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .

The company continues to be one of the dominant warehouse retailers based on the breadth and quality of merchandise offered. In fact, the strategy to sell products at heavily discounted prices has helped it to remain on growth track.

Costco is also employing the Zest Fresh solution to augment its Fresh Food Supply Chain. Zest Fresh lowers waste by 50%, increases shelf life of the food and allows the company to offer low prices on fresh food.

In the evolving retail ecosystem, Costco has been able to create a niche for itself on the back of growth strategies, better price management, strong membership trends and increasing penetration of e-commerce business. Certainly, these factors have aided the company in sustaining its impressive comparable sales run.

Notably, comps for the month of August rose 9.2%, following an advance of 8.3% in July, 9.7% in June. The company generated net sales of $11 billion in the month of August, up 12.2% year over year. Meanwhile, net sales have improved 10.1% and 11.7%, in the months of July and June, respectively.

Net sales for the fourth quarter of fiscal 2018 grew 5% to $43.4 billion, while comps improved 9.5%. Certainly, these metrics underlines the sound fundamentals of the company.

With the wave of digital transformation hitting the sector, retailers are fast adopting the omni-channel mantra to provide a seamless shopping experience, whether online or in-stores. Costco, which shares space with Walmart WMT , Target TGT and Ross Stores ROST , is no exception to this trend.

It is also steadily expanding e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea and Taiwan. E-commerce comparable sales advanced 23.8% in the month of August and 26.2% during the final quarter of fiscal 2018.

Certainly, Costco seems somewhat unfazed by tough retail scenario, comprising soft store traffic and inclination toward online shopping. However, analysts pointed that any incremental investments or aggressive pricing strategy may hurt margins. Further, we note that SG&A expenses and merchandise costs have been increasing from quite some time now.

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Costco Wholesale Corporation (COST): Free Stock Analysis Report

Walmart Inc. (WMT): Free Stock Analysis Report

Ross Stores, Inc. (ROST): 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 Nasdaq, Inc.


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

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