Excluding the impact of gasoline price deflation and foreign exchange, total comps rose 1 percent for the month.
Michael Lasser, a retail analyst at UBS commented on Costco's report. He noted that adjusting a holiday shift, Costco's core U.S. sales would have been higher 3.5 percent year-over-year. He added that using the adjusted core result, the company's July comp was the highest since February on a one-, two- and three-year stacked basis.
The analyst also pointed out that Costco is successfully transitioning past the early disruption from its labeled credit card shift and now members are "seeking to take full advantage" of the new credit card's "more attractive" reward structure.
"As awareness of the compelling offer grows, particularly amongst non-members, we believe COST's sales growth will continue to accelerate," Lasser wrote.
Lasser also stated he isn't concerned with Costco's international sales, which are trending lower, especially Canada's core comp, which came in at the lowest level since September 2015. The analyst attributed this to continued pressures from tougher comparisons given the credit card switch and the last of Target Corporation TGT closures in the market.
Nevertheless, Costco's adjusted traffic still grew 3.25 percent worldwide despite ongoing pressures which suggests customers "continue to be strong believers" in the company's value proposition.
Shares of Costco remain Buy rated with an unchanged $180 price target.
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