Shares of Costco Wholesale Corporation COST fell 1.6% following comparable-store sales (comps) results for March, the five weeks ended Apr 5, 2015, that fell short of analysts' expectations. The warehouse retailer witnessed comps decline of 2%, reflecting flat comps at its U.S. locations and a 9% fall at international locations.
Management cited that the timing of Easter this year resulted in one less operating day compared with last year, thus adversely impacting the company’s sales and comps results.
Excluding the effect of deflation in gasoline prices and the impact of foreign currency fluctuations, Costco’s comps for March rose 4%, reflecting comparable sales growth of 4% both at its U.S. and international outlets.
Overall March retail sales remained soft. Market pundits believe that unfavorable weather conditions, the unexpected slowdown in fourth-quarter 2014 GDP growth rate to 2.2% and the West Coast port dispute were the reasons behind the subdued retail sales performance for the month. Moreover, industry experts believe that sales in April may be soft due to the absence of Easter-related sales that had benefited companies last year.
Retailers such as Rite Aid Corporation RAD and Zumiez, Inc. ZUMZ witnessed comps growth of 4.3% and 5.5%, respectively, during March. However, the results fell short of analysts’ estimates.
Coming to Costco, comps for the 31-week period increased 2%, buoyed by a rise of 4% across the U.S. locations, but partially offset by a 2% decline at the international locations. Excluding the effect of gasoline prices and foreign currency fluctuations, comps for the period jumped 7%, reflecting an equivalent percentage increase at the U.S. and international locations.
Costco’s total net sales for March came in at $10.40 billion compared with $10.43 billion in the comparable year-ago period. Net sales for the 31-week period increased 5% to $67.58 billion.
The company currently operates 672 warehouses, 474 in the U.S. and Puerto Rico, 89 in Canada, 34 in Mexico, 26 in the United Kingdom, 20 in Japan, 11 in Korea, 10 in Taiwan, 7 in Australia and 1 in Spain. Further, Costco plans to open 16 more warehouses before the end of the fiscal year on Aug 30, 2015.
Costco currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the retail sector is Burlington Stores, Inc. BURL, carrying a Zacks Rank #2 (Buy).
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