Did Costco’s November Comparable Sales Impress Investors?

Shares of Costco Wholesale Corporation COST gained roughly 3.5% following the company’s better-than-expected comparable-store sales (comps) results for the month of November, reported on Dec 2, 2015. The warehouse retailer witnessed flat comps for the month, after a decline of 1% in October and flat comps registered in September. Comps for November reflect an increase of 3% at the company’s U.S. locations, offset by a decline of 10% and 3% at its Canadian and international locations, respectively.

However, excluding the effect of deflation in gasoline prices and the adverse impact of foreign currency fluctuations, Costco’s comps for the month under review rose 6%, portraying comparable sales growth of 6%, 8% and 7% across its U.S., Canadian and international outlets, respectively.

Costco’s comps for the 12-week period fell 1%, incorporating a 2% increase across its U.S. locations, more than offset by a 9% decline at its Canadian locations and a 5% drop at the international locations. Excluding the effect of gasoline prices and foreign currency fluctuations, comps for the period jumped 6%, reflecting an improvement of 6%, 9% and 7% at the U.S., Canadian and international locations, respectively.

On the sales front, this Zacks Rank #3 (Hold) company reported a 3% jump in net sales to $9.68 billion for the four-week period ended Nov 29, 2015. For the 12-week period, net sales came in at $26.63 billion, reflecting a 1% rise from $26.28 billion generated in the year-ago period.

Costco, which competes with Wal-Mart Stores Inc. WMT, currently operates 697 warehouses, which include 487 in the U.S. and Puerto Rico, 90 in Canada, 36 in Mexico, 27 in the U.K., 24 in Japan, 12 in Korea, 11 in Taiwan, 8 in Australia and 2 in Spain. Costco plans to open 1 more warehouse before the end of the current calendar year.

Stocks to Consider

Better-ranked retail stocks that appear promising include Ross Stores Inc. ROST and The Kroger Co. KR, both carrying a Zacks Rank #2 (Buy).

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