Costco To Benefit From Positive Sales Momentum In The U.S. In Q1

-10.83%
Downside
733
Market
653
Trefis
COST: Costco logo
COST
Costco

Costco (NASDAQ:COST) is scheduled to announce its fiscal first quarter results on Thursday, December 14. The company reported a mixed fiscal 2017, as both its earnings per share and revenue estimates missed market expectations in the first half but rebounded to a solid growth trajectory in the second half. In fiscal 2017, the retailer’s overall revenue increased 8% year-over-year (y-o-y) to around $126 billion, driven by incremental revenues from new stores, an 8% y-o-y increase in membership fees and a 4% increase in comparable sales. In addition, the company’s higher-fee Executive Memberships represented more than 40% of the company’s member base in the year. Currently, Costco’s member renewal rates are 90% in the U.S. and Canada and 87% worldwide.

In a recent press release, Costco reported that its comparable store sales during the fiscal first quarter increased by 11%, including the impact of gasoline prices and currency effects, largely driven by a strong 10% comparable sales growth in the U.S. and 11% in Canada. Excluding gasoline and currency fluctuations, combined comparable sales increased by 8%, driven by 9% growth in the U.S., a 4% rise in Canada and 8% growth in other international markets. Clearly, Costco’s sales benefited from the Black Friday weekend in November. Overall, the retailer’s continued growth momentum confirms that it is able to grow traffic at its brick and mortar warehouses despite stiff competition in the grocery sector, and growing overlap with Amazon (NASDAQ: AMZN) since it purchased Whole Foods. The retailer’s stock is now trading almost 20% higher than its price at the beginning of the year.

Relevant Articles
  1. Does Costco Stock Have More Room For Gains After Rising 40% in 2023?
  2. What To Expect From Costco’s Stock Post Q4 Results?
  3. Costco’s Stock Up 23% So Far, What’s Next?
  4. What To Watch For In Costco’s Stock Post Q3?
  5. What’s Next for Costco Stock?
  6. Company Of The Day: Costco

Costco’s subsequent monthly sales figures also confirm the retailer’s growth in its top line, driven by a weaker U.S. dollar and higher gasoline prices. As a result, Costco was able to attract comparable sales of more than 6% for the last three consecutive months in the U.S. – 9% in September, 7% in October, and 10% in November. In fact, the company also managed to grow its comparable sales excluding these factors during the quarter – 7% in September, 6% in October, and 8% in November. We expect Costco to benefit from the positive momentum of its sales in the U.S. going forward. 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 first quarter revenues of $31.4 billion and earnings of $1.34 per share, implying growth of about 14% and 15%, respectively.

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

Interactive Institutional Research (Powered by Trefis):

Global Large CapU.S. Mid & Small CapEuropean Large & Mid Cap |

More Trefis Research