What Conclusions Can Be Drawn From Costco’s August Comparable Sales?
Costco (NASDAQ:COST) reported its August sales results on Wednesday, August 31. The retailer’s net sales grew by 2.3% to $8.9 billion, but comparable sales remained flat during the month of August. Comparable sales remained flat in the U.S., and the other international division except Canada for August. However, Costco’s comparable sales grew by 2% excluding the impact of gasoline prices and foreign currency fluctuations driven by 2% growth in the U.S.
Costco’s August comparable sales growth in the U.S. has been slow over the last two years. The main driver of that has been subdued gasoline prices, which is evident from the table above. Gasoline prices have declined by 40% over the last three years, which has negatively impacted revenues coming from fuel sales. This is clear from the fact that Costco’s U.S. comparable sales in August excluding fuel actually increased by 2% year over year.
In fact, Costco’s organic performance has been stronger than the U.S. retail industry, thanks to its business model. For instance, Costco’s net sales in June 2016 increased 2%, while retail sales in the U.S. were up only 1%. This trend has sustained for the past six months, which reflects the core strength of Costco’s U.S. business. We expect that the company’s sales grew faster than the industry in August as well (data not yet available). So while the monthly sales report looks relatively lackluster at first glance, it does have a silver lining.
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