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Costco's (COST) Stellar Sales & Comps Run Continue in June

Costco Wholesale Corporation’s COST growth strategies, better price management, decent membership trends and increasing penetration of e-commerce business have been contributing to its upbeat performance. Cumulatively, these factors have been aiding this Issaquah, WA-based company in registering impressive sales numbers.

Scoring High on Sales

Costco’s strategy to sell products at discounted prices has helped draw customers, who have been seeking both value and convenience amid the ongoing crisis. The company’s net sales increased 16.9% to $18.92 billion for the retail month of June — the five-week period ended Jul 4, 2021 — from $16.18 billion in the last year. This followed an improvement of 24.2%, 33.5% and 17.6% in the months of May, April and March, respectively.

Given the current scenario, people have been shopping more at discount stores for essentials and other discretionary purchases. Quite obviously, Costco has emerged as viable option for them. The company’s differentiated product range resonates well with customers’ spending habits.

However, management informed that this year’s June retail month had one less shopping day compared with the last year due to the calendar shift of Memorial Day. This shift hurt sales by roughly one and one-half to two percent.

 

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Decent Comps Performance

Costco’s comparable sales for the month of June rose 14.1%. This followed an increase of 22.8%, 32.5% and 16% in the months of May, April and March, respectively. The monthly comparable sales reflect an improvement of 12.1%, 23.4% and 15.4% in the United States, Canada and Other International locations, respectively.

Excluding the impacts from change in gasoline prices and foreign exchange, comparable sales for the month under discussion rose 7.9% on an improvement of 7.8%, 8.9% and 6.8% in the United States, Canada and Other International locations, respectively.

Online Sales: A Key Catalyst

Undoubtedly, Costco has been rapidly adopting the omni-channel mantra to provide a seamless shopping experience, whether online or at stores. We note that e-commerce comparable sales rose 20.8% during the month of June. This followed an increase of 12.1%, 20.5% and 57.7% in the months of May, April and March, respectively. Costco operates e-commerce sites in the United States, Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.

Costco’s acquisition of Innovel Solutions, a leading provider of third-party end-to-end logistics solutions, — now called Costco Logistics — has boosted its e-commerce capabilities and facilitates it to sell "big and bulky" items.

Wrapping Up

Costco continues to be one of the dominant warehouse retailers based on the expanse and quality of merchandise offered. It is focused on ramping up investments in the wake of rising competition from the likes of Dollar Tree DLTR, Dollar General DG and Target TGT. We believe that the company’s business model and commitment toward opening membership warehouses will continue to drive traffic.

We also note that shares of this Zacks Rank #2 (Buy) company have appreciated approximately 12.3% in the past three months compared with the industry’s growth of 7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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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.

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