Amid a tough retail landscape Costco Wholesale Corporation COST continued with its solid comparable-store sales (comps) trend in the month of October as well. While major chains are grappling with sluggish store and mall traffic as consumers switch to online shopping, Costco seems somewhat resilient to the challenging retail backdrop.
We believe that the hike in annual membership fees and increased penetration of Citi Visa co-brand card program will benefit the stock. We are also encouraged by Costco’s expansion strategy, as it remains committed to opening new clubs and expanding e-commerce capabilities.
Sturdy Comps Performance
Comps for four-week ended Oct 29, 2017 increased 7.5%, following an increase of 8.9% in September, 7.3% in August, 6.2% in July, 6% in June, 4.1% in May, 3% in April, 6% in March, 4% in February and 7% in January.
The company generated net sales of $10.02 billion in October, up 10.1% year over year. Notably, net sales increased 12.1%, 10%, 8.8%, 7%, 7%, 5%, 9%, 8% and 9% in September, August, July, June, May, April, March, February and January, respectively. Comparable e-commerce sales for the month under review surged 31%.
Comps for October reflect an increase of 7%, 9% and 8.2% at the United States, Canada and Other International locations, respectively. Excluding the impact of foreign currency fluctuations and gasoline prices, Costco’s comps for the month under review rose 5.6%. The company recorded comps increase of 5.9%, 2.8% and 7.4% at the United States, Canada and Other International locations.
For the eight-week period, Costco reported 8.3% jump in comps, displaying an increase of 8.1%, 9% and 8.9% at the United States, Canada and Other International locations. Net sales for the period came in at $19.87 billion, an increase of 11.3% from the year-ago period.
Wrapping Up
Shares of Costco have outpaced the Zacks Retail-Discount Industry in a year gaining from sturdy comps performance. In a year, this Zacks Rank #3 (Hold) stock has advanced 16%, while the industry, which occupies a space in the top 9% (22 out of 256) among the Zacks classified industries, has gained 7.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Costco, which competes with Wal-Mart Stores, Inc. WMT, operates 744 warehouses, comprising 517 warehouses in the United States and Puerto Rico, 97 in Canada, 37 in Mexico, 28 in UK, 26 in Japan, 13 in Korea, 13 in Taiwan, nine in Australia, two in Spain, one in Iceland and one in France.
Apart from Costco, L Brands, Inc. LB and Zumiez Inc. ZUMZ came out with comparable sales results for the month of October. Comps for L Brands and Zumiez have increased 2% and 6.6%, respectively.
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