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Costco Exits 2017 With Stellar Comps Performance in December

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Costco Wholesale Corp. (COST - Free Report) continued with its solid comparable-store sales (comps) trend in the month of December 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 competitive retail backdrop.

Improving labor market, rising disposable income and elevated consumer sentiment have ushered confidence in the operator of membership warehouses. Meanwhile, impressive December sales give an indication that holiday season has turned out to be an eventful one.

Shares of Costco have outpaced the industry in a year gaining from sturdy comps performance. This Zacks Rank #3 (Hold) stock has advanced 23.1%, compared with the industry’s growth of 15.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sturdy Comps Performance

Comps for five-week ended Dec 31, 2017 increased 11.5%, following an increase of 10.8% in November, 7.5% in October, 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 $14.94 billion in December, up 14.3% year over year. Notably, net sales increased 13.2%, 10.1%, 12.1%, 10%, 8.8%, 7%, 7%, 5%, 9%, 8% and 9% in November, October, September, August, July, June, May, April, March, February and January, respectively. Comparable e-commerce sales for the month under review surged 33.3%.

Comps for December reflect an increase of 10.5%, 11.9% and 17% 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 8.8%. The company recorded comps increase of 9.1%, 6.1% and 9.6% at the United States, Canada and Other International locations.

For the 17-week period, Costco reported 9.1% jump in comps, displaying an increase of 8.5%, 9.4% and 11.9% at the United States, Canada and Other International locations. Net sales for the period came in at $46.06 billion, an increase of 11.9% from the year-ago period.

Wrapping Up

We believe that Costco continues to be one of the dominant retail wholesalers based on the breadth and quality of merchandise offered. The company’s strategy to sell products at heavily discounted prices has helped it to remain on growth track as cash-strapped customers continue to reckon Costco as a viable option for low-cost necessities. It is also gradually expanding e-commerce capabilities in the United States, Canada, UK, Mexico, Korea and Taiwan.

We believe that the hike in annual membership fees and increased penetration of Citi Visa co-brand card program is benefiting the stock. We are also encouraged by Costco’s expansion strategy, as it remains committed to opening new clubs and expanding e-commerce capabilities.

Costco, which shares space with Burlington Stores, Inc. (BURL - Free Report) and Dollar Tree, Inc. (DLTR - Free Report) , operates 746 warehouses, comprising 518 warehouses in the United States and Puerto Rico, 98 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, Zumiez Inc. (ZUMZ - Free Report) came out with December sales numbers, wherein its comps increased 7.9%.

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