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Costco Gains Momentum Even As Market Wrings Its Hands Over The Amazon Threat

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Costco Gains Momentum Even As Market Wrings Its Hands Over The Amazon Threat

Costco Wholesale Corporation (NASDAQ: COST)’s August same-store sales were up 7.3 percent, and net sales in the month finished at $9.8 billion, exceeding expectations.

The same-store sales number beat Deutsche Bank’s projection of 5 percent, analyst Paul Trussell said in a Wednesday note.

The wholesale club’s momentum has outpaced expectations in recent months, but Costco faces increasing competition, including from Amazon.com, Inc. (NASDAQ: AMZN), which announced price cuts at Whole Foods, Trussell said.

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Deutsche Bank maintains a Hold on Costco with a $172 price target. The bank is remaining “sidelined” on the stock and closely monitoring both membership growth and renewal rates at Costco, the analyst said.

A Strong August

Costco’s traffic was up 3.9 percent and 4.3 percent in the U.S., higher than Deutsche’s projection of 3.75 percent. With prices up 12 percent year-over-year, gas added 110 basis points to Costco’s single-store sales, according to Deutsche.

Comparable e-commerce sales in August rose 26 percent, the firm said.

Core comp excluding gas was up 6.1 percent in the U.S. in August after a 5.5-percent increase in July. Deutsche had projected Costco’s core comp in the month at 4.9 percent; the Street was expecting 4.7 percent.

Related Links:

Kroger, Grocers Fall Hard After Amazon-Whole Foods News

Amazon's Making It Tough To Be A Costco Shareholder

Latest Ratings for AMZN

DateFirmActionFromTo
Sep 2019MaintainsOverweight
Sep 2019MaintainsOutperform
Aug 2019AssumesBuy

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