Costco Wholesale Corporation’s COST better price management, strong membership trends and increasing penetration of e-commerce business have been playing a crucial role in the robust comparable sales (comps) run. Moreover, favorable job scenario, rising wages and improved consumer sentiment are other catalysts. Cumulatively, these helped the company to report decent comps number for the month of August, in spite of operating in a fast-changing retail landscape.
The operator of membership warehouses highlighted that comps for the month of August rose 5.5% following an increase of 5.6% in July, 5.4% in June, 4.2% in May, 5.4% in April, 5.7% in March, 3.5% in February and 5.2% in January. Comps for August reflect an increase of 6.4% in the United States, 3.6% in Canada and 2.3% in Other International locations, respectively.
Excluding the impact of foreign currency fluctuations, gasoline prices and accounting change concerning revenue recognition (ASC 606), comps for the month rose 5.9%, while the same advanced 5.9%, 6.1% and 5.9% in the United States, Canada and Other International locations, respectively.
Meanwhile, net sales improved 6.9% to $11.79 billion in the month under review, following an increase of 7.9%, 7.5%, 5.9%, 7.3%, 7.4%, 5% and 8% in July, June, May, April, March, February and January, respectively.
For the 16 weeks ended Sep 1, 2019, net sales came in at $46.45 billion, up about 7% from $43.41 billion reported in the year-ago period. Comps for the period improved 5.1%, while the same increased 6.2%, 2.6% and 1.9% in the United States, Canada and Other International locations, respectively.
Costco is also steadily expanding e-commerce capabilities in the United States, Canada, the U.K., Mexico, Korea and Taiwan. E-commerce comparable sales surged 23.9% in the month of August, following an increase of 21.3%, 15.7%, 20.2%, 23.6%, 20.6%, 24.2% and 22.1%, in the months of July, June, May, April, March, February and January, respectively.
Costco, which shares space with Walmart WMT, Target TGT and Ross Stores ROST, continues to be one of the dominant warehouse retailers based on the breadth and quality of merchandise offered. In fact, its strategy of selling products at heavily discounted prices has helped it to remain on growth trajectory. In the past six months, shares of this Zacks Rank #3 (Hold) company have increased 32.3% outperforming the industry’s growth of 25.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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