Costco Misses Targets

Friday saw Costco Wholesale

post a 6% rise in same-store sales for the month of March but still fall short of market expectations. According to the

, the company's numbers were hurt in part by weak foreign currencies compared with the U.S. dollar. Analysts had been expecting same-store sales (specifically, sales in stores open for a minimum of a one year) to go up 6.7%. This would take into account the impact of fuel prices, according to data published by

. Costco's comparable store sales were up 6% in March, without the impact of gasoline prices and foreign exchange. Meanwhile, international same-store sales, excluding fuel prices and foreign exchange, went up 9% in March. Including those things, they rose 7%. Net sales rose 10% to $9.13 billion, for the five weeks ending April 1. On Thursday, Deutsche Bank published a research report stating that March SSS were respectable at COST as the club posted a 6.0% SSS - slightly below our 6.8% estimate and in-line w/recent buy-side sentiment. Digging into the details, the core was up 5.5% (50 bps below our 6.0% est.), implying a 12.5% 2-yr. stack - a very solid number and above its TTM avg. of 11.9%. "The recent benefits from food inflation are abating (COST early indicator on this front given 12x+ inv. turns), which is literally negative for players with uninspiring traffic trends (ala WMT/SWY/ SVU). All told, considering COST was up against its second toughest compare from last year (March SSS up 13%), the result was solid, but unspectacular." On the same day, as COST released the numbers, Piper Jaffray said that reported same store sales of +6% in March were generally in line with consensus expectations and core comp (when excluding gasoline, FX, and cannibalization) was at the upper end of expectations. "We believe comps accelerated on a two year trend on this basis from +13.8% in February to +14.2% in March. For the month, COST saw geographic strength in the Midwest, Texas, Southeast, and Northeast while Mexico, Canada, and Korea were strong internationally. Importantly, traffic did decelerate in the month while baskets increased modestly, but we would point out that COST faced its most difficult traffic comparison since November 2010."