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Costco Wholesale to Expand Store Base in U.S. & Overseas

Despite sensing the adverse impact a strong U.S. dollar and lower gasoline prices can have on its business, Costco Wholesale CorporationCOST is planning to open mores stores in the U.S. and overseas. The company foresees growth opportunities in the U.S., Asia and Canada and wants to utilize this in order to expand its customer base.

The company plans to put up 32 stores over the next 12 months, out of which 13 will be built outside the U.S. The company will open its first store in France and the second one in Spain. Costco currently has more than 80 stores in Canada and is looking to increase the number to more than 100 in the coming years.

The company's strategy to sell products at heavily discounted prices has helped it to remain on the growth track as cash-strapped customers continue to recognize Costco as a viable option for low-cost necessities. A differentiated product range enables Costco to provide an upscale shopping experience to its customers, which leads to market share gains and higher sales per square foot.

Moreover, the company continues to maintain a healthy membership renewal rate. The company is also gradually expanding its e-commerce capabilities in the U.S., Canada, UK and Mexico. Costco's e-commerce sales increased 20% in fiscal 2015.

However, in the recent quarter, the Zacks Rank #4 (Sell) company reported disappointing comparable-store sales (comps). While lower gasoline prices impacted U.S. comps, currency fluctuations adversely affected international comps.

Costco's comps for the fourth quarter of fiscal 2015 fell 1%, reflecting a 10% decline in Canada and a 7% drop at other international locations, partially offset by a 2% increase in the U.S. Comps dipped 2% in August following flat comps in July and a fall of 1% registered in June.

Stocks to Consider

Some better-ranked stocks in this sector include Big Lots Inc. BIG , Target Corp. TGT and Burlington Stores, Inc. BURL . All these stocks hold a Zacks Rank #2 (Buy).

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TARGET CORP (TGT): Free Stock Analysis Report

COSTCO WHOLE CP (COST): Free Stock Analysis Report

BIG LOTS INC (BIG): Free Stock Analysis Report

BURLINGTON STRS (BURL): 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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