Costco Continue to Post Decent Growth – Shares have outperformed the industry in a year gaining from sturdy comparable performance and bullish results Q4 2017. Costco (NYSE:COST) appears undeterred by tough retail trading conditions, emanating from softer traffic and the pull for customers toward shopping online.
Shares Fundamentally Sound: Costco’s (NYSE:COST) shares have improved 4.5% in 12 months, while the sector has gained 1.5%. This came on the backdrop of continued positive comparable-store sales performance.
Costco Continue to Post Decent Growth
Comparable sales for five-week ended Oct 1, 2017 increased 8.9%. The company generated net sales of $12.40 billion in September, up 12.1% year over year. Comparable e-commerce sales for the month surged 30%.
Comparable sales for September show an increase of 9%, 9.4% and 8.2% at the US and Internationally. Excluding the impact of foreign currency fluctuations and gasoline prices, Costco’s comparable sales for the month under review rose 6.2%. The company recorded comps increase of 7.1%, 1.4% and 7.2% at the US and Other International locations.
Q4 net sales were up 15.8% to $41.3bln, while membership fee increased 13.3% to $943 million. Moreover, we noticed that the rate of increase in membership fee accelerated from 4.2% registered in the third quarter.
Costco’s comparable-store sales for the Q4 improved 6.1%, posting an increase of 2.1% in average transaction and 3.9% in average shopping frequency. The company saw comparable growth of 6.5%, 4.9% and 5.6% across the United States and Internationally, respectively.
Excluding the effect of gasoline prices and foreign exchange, the company witnessed comps growth of 5.7% during the quarter with the United States, Canada and Other International registering comps growth of 5.8%, 4.8% and 6%, respectively.
Costco’s operating income in the quarter increased 21.7% year over year to $1,450 million, while operating margin (as a percentage of total revenues) expanded 20 basis points to 3.5%. However, gross margin as a percentage of net sales contracted 15 basis points to 11.3%.
As of Oct 06, 2017, the FT.com consensus forecast which polls 30 investment analysts covering Costco (NYSE:COST) Wholesale Corporation suggest the company will outperform the market.