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Costco's Strong September Sales Signal Continued Market Dominance
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Costco Wholesale Corporation (COST - Free Report) has once again demonstrated its formidable position in the retail landscape with a stellar sales performance for September 2024. As shoppers continue to prioritize value, Costco’s unique membership model, competitive pricing and consistent customer loyalty have enabled the company to maintain its dominance, even in a challenging operating environment.
Let’s delve into the details of Costco's recent performance.
September Sales Performance Reinforces Costco's Leadership
The retailer’s comparable sales for September illustrate its market strength across various regions. For the five weeks ended Oct. 6, comparable sales in the United States grew 6.5%, while Canada and Other International markets saw increases of 5.7% and 8.5%, respectively. The total company comparable sales rose 6.7%. This stellar performance follows consecutive increases of 5% and 5.2% in August and July, respectively.
September’s total and comparable retail sales saw a boost of about two percent in the United States and one and one-half percent globally, driven by solid consumer demand in the final week of the month, largely influenced by Hurricane Helene and disruptions from port strikes.
When adjusting for the effects of gasoline prices and foreign exchange rates, Costco’s comparable sales paint an even more impressive picture. In the United States, comparable sales, excluding these factors, rose 9.3% in September, while Canada and Other International markets posted gains of 6.3% and 9.6%, respectively. The company’s total comparable sales, excluding these external factors, increased 8.9%.
One of the standout aspects of Costco’s September performance was its 22.9% increase in e-commerce comparable sales. Excluding the impacts of gasoline prices and foreign exchange, the metric was up by an equivalent rate. The surge in online sales underscores the company's effective digital strategy and ability to cater to the evolving shopping preferences of consumers.
As a result, Costco's net sales for September increased 9%, reaching $24.62 billion, up from $22.59 billion in the same period last year. This follows a sales improvement of 7.1% reported in both August and July, reflecting a strong and consistent sales performance in the past few months.
Image Source: Zacks Investment Research
Costco’s Membership Model Drives Customer Loyalty
Costco’s unique membership-based business model is a core component of its success. Costco members, who pay an annual fee, benefit from deep discounts and high-quality merchandise. In turn, Costco enjoys a steady revenue stream, with membership fees contributing significantly to its bottom line. The company maintains renewal rates above 90%, underscoring the value customers place on the savings and benefits offered.
Costco officially raised its membership fees for U.S. and Canadian customers effective Sept. 1. Gold Star, Business and Business add-on memberships now cost $65 annually, a $5 increase, while Executive Memberships have risen from $120 to $130. This move also comes with a boost in the maximum annual 2% Reward for Executive Members, up from $1,000 to $1,250.
Final Word on Costco
We remain optimistic about Costco’s growth prospects, driven by strategic investments in technology, logistics and product offerings. Its distinctive membership-based business model and pricing strength differentiate it from traditional competitors. The emphasis on bulk sales and efficient inventory management allows it to keep prices low, making it a preferred shopping destination for budget-conscious consumers.
Shares of this Zacks Rank #2 (Buy) company have advanced 23.8% in the past six months compared with the Retail – Discount Stores industry’s rise of 13.1%.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings implies growth of around 8.8% and 12.7%, respectively, from the year-ago reported numbers.
The Kroger Co. (KR - Free Report) , which operates as a food and drug retailer in the United States, currently carries a Zacks Rank #2. KR has a trailing four-quarter earnings surprise of nearly 8.2%, on average.
The Zacks Consensus Estimate for Kroger’s current quarter’s sales and earnings indicates growth of 1% and 3.2%, respectively, from the year-ago reported numbers.
Flowers Foods, Inc. (FLO - Free Report) , one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO delivered an earnings surprise of 1.9% in the last reported quarter.
The Zacks Consensus Estimate for Flowers Foods’ current financial year’s sales and earnings implies growth of 1% and 5%, respectively, from the year-ago reported numbers.
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Costco's Strong September Sales Signal Continued Market Dominance
Costco Wholesale Corporation (COST - Free Report) has once again demonstrated its formidable position in the retail landscape with a stellar sales performance for September 2024. As shoppers continue to prioritize value, Costco’s unique membership model, competitive pricing and consistent customer loyalty have enabled the company to maintain its dominance, even in a challenging operating environment.
Let’s delve into the details of Costco's recent performance.
September Sales Performance Reinforces Costco's Leadership
The retailer’s comparable sales for September illustrate its market strength across various regions. For the five weeks ended Oct. 6, comparable sales in the United States grew 6.5%, while Canada and Other International markets saw increases of 5.7% and 8.5%, respectively. The total company comparable sales rose 6.7%. This stellar performance follows consecutive increases of 5% and 5.2% in August and July, respectively.
September’s total and comparable retail sales saw a boost of about two percent in the United States and one and one-half percent globally, driven by solid consumer demand in the final week of the month, largely influenced by Hurricane Helene and disruptions from port strikes.
When adjusting for the effects of gasoline prices and foreign exchange rates, Costco’s comparable sales paint an even more impressive picture. In the United States, comparable sales, excluding these factors, rose 9.3% in September, while Canada and Other International markets posted gains of 6.3% and 9.6%, respectively. The company’s total comparable sales, excluding these external factors, increased 8.9%.
One of the standout aspects of Costco’s September performance was its 22.9% increase in e-commerce comparable sales. Excluding the impacts of gasoline prices and foreign exchange, the metric was up by an equivalent rate. The surge in online sales underscores the company's effective digital strategy and ability to cater to the evolving shopping preferences of consumers.
As a result, Costco's net sales for September increased 9%, reaching $24.62 billion, up from $22.59 billion in the same period last year. This follows a sales improvement of 7.1% reported in both August and July, reflecting a strong and consistent sales performance in the past few months.
Image Source: Zacks Investment Research
Costco’s Membership Model Drives Customer Loyalty
Costco’s unique membership-based business model is a core component of its success. Costco members, who pay an annual fee, benefit from deep discounts and high-quality merchandise. In turn, Costco enjoys a steady revenue stream, with membership fees contributing significantly to its bottom line. The company maintains renewal rates above 90%, underscoring the value customers place on the savings and benefits offered.
Costco officially raised its membership fees for U.S. and Canadian customers effective Sept. 1. Gold Star, Business and Business add-on memberships now cost $65 annually, a $5 increase, while Executive Memberships have risen from $120 to $130. This move also comes with a boost in the maximum annual 2% Reward for Executive Members, up from $1,000 to $1,250.
Final Word on Costco
We remain optimistic about Costco’s growth prospects, driven by strategic investments in technology, logistics and product offerings. Its distinctive membership-based business model and pricing strength differentiate it from traditional competitors. The emphasis on bulk sales and efficient inventory management allows it to keep prices low, making it a preferred shopping destination for budget-conscious consumers.
Shares of this Zacks Rank #2 (Buy) company have advanced 23.8% in the past six months compared with the Retail – Discount Stores industry’s rise of 13.1%.
3 Other Picks You Can’t Miss Out On
Ollie's Bargain (OLLI - Free Report) , America’s largest retailer of closeout merchandise and excess inventory, currently carries a Zacks Rank #2. OLLI has a trailing four-quarter earnings surprise of 7.9%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Ollie's Bargain’s current financial-year sales and earnings implies growth of around 8.8% and 12.7%, respectively, from the year-ago reported numbers.
The Kroger Co. (KR - Free Report) , which operates as a food and drug retailer in the United States, currently carries a Zacks Rank #2. KR has a trailing four-quarter earnings surprise of nearly 8.2%, on average.
The Zacks Consensus Estimate for Kroger’s current quarter’s sales and earnings indicates growth of 1% and 3.2%, respectively, from the year-ago reported numbers.
Flowers Foods, Inc. (FLO - Free Report) , one of the largest producers of packaged bakery foods in the United States, currently carries a Zacks Rank #2. FLO delivered an earnings surprise of 1.9% in the last reported quarter.
The Zacks Consensus Estimate for Flowers Foods’ current financial year’s sales and earnings implies growth of 1% and 5%, respectively, from the year-ago reported numbers.