Costco continued to gain share in May
KEY POINT FROM THIS ALERT:
- Our price target on shares of Costco Wholesale (COST) remains $220.
Late last night, Costco Wholesale (COST) once again delivered simply outstanding overall sales and comparable sales this time for the month of May. This continues the multi-month streak of not only mid to upper single digit year over year comparisons but ones that clearly standout relative to overall brick & mortar retail. We continue to see Costco winning consumer wallet share as consumers look to stretch their disposable dollars. With gas prices and other costs poised to creep higher as companies contend with rising input and freight costs, we see Costco extremely well positioned for what lies ahead.
Now for the nitty-gritty on the May sales data…
Net sales of $11.02 billion for the retail month of May rose 14.1% compared to $9.66 billion last year. Helping achieve that robust results were the 950 warehouse locations exiting May 2018 vs. 732 at the end of May 2017 – a 2.7% increase year over year that also bodes very well for a continued rise in the high margin membership fee revenue. In terms of the geographic, year over year comparison for the four week period, Costco’s
- US sales rose 11.7% (8.7% excluding gas and foreign exchange)
- Canada, up 13.0% (5.4% excluding gas and foreign exchange)
- Other International, 9.4% (7.4% excluding gas and foreign exchange)
- Total Costco, up 11.7% (8.0% excluding gas and foreign exchange)
And while it remains a small piece of Costco’s overall revenue mix, its E-commerce business grew 34.4% during May 2018 vs. the year-ago month (33.3% excluding foreign currency).
Reviewing all of the above in full, Costco is reaping the benefits of having properly positioned itself with consumers, especially Cash-strapped Consumers, and is in the process of reaping those benefits as it expands its footprint.
We’ll continue to enjoy the ride.
- Our price target on shares of Costco Wholesale (COST) remains $220.