Positive Comparable Sales Could Boost Costco’s Top Line In Q4

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Costco (NASDAQ:COST) is scheduled to announce its fiscal fourth quarter results on Thursday, October 5. The company reported a relatively solid fiscal third quarter, as both its earnings per share and revenue estimates came in ahead of market expectations. In Q3, the retailer’s overall revenue increased 8% year-over-year (y-o-y) to around $29 billion, driven by incremental revenues from new stores, a 4% y-o-y increase in membership fees and a 5% increase in comparable sales. In addition, the company’s higher-fee Executive Membership represented around 38% of the company’s member base in the quarter. Currently, Costco’s member renewal rates are 90.2% in the U.S. and Canada and 87.5% worldwide.

In a recent press release, Costco reported that its comparable store sales during August increased by 7%, including the impact of gasoline prices and currency effects, largely driven by a strong 7% comparable sales growth in the U.S. and 8% in Canada. Excluding gasoline and currency fluctuations, combined comparable sales increased by 6%, driven by 6% growth in the U.S., a 4% rise in Canada and 7% growth in other international markets. Given these robust numbers, we expect Costco to see growth in comparable sales in the fourth quarter as well.

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Also See: What Conclusions Can Be Drawn From Costco’s Strong Comparable Sales In August?

We expect Costco to benefit from the positive momentum of its sales in the U.S. The company’s organic performance has been keeping pace with the U.S. retail industry, primarily due to its business model. Per consensus estimates, the company is expected to report fourth quarter revenues of $41.6 billion and earnings of $2.01 per share, implying growth of about 16% and 14%, respectively.

Have more questions about Costco? Please refer to our complete analysis for Costco

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