Defying Discretionary Downturn: Costco's High Membership Loyalty Pays Off In Tough Times - Costco Wholesale (NASDAQ:COST)

Telsey Advisory Group analyst Joseph Feldman reiterated an Outperform rating on the shares of Costco Wholesale Corporation COST with a $540 price target.
Costco is slated to report April sales after the markets close on May 3.
The analyst estimates a total comparable sale of 2.5% versus 12.6% last year.
In April, gas prices decreased about 9.0% Y/Y, which the analyst thinks should negatively impact total comparable sales by ~90 basis points.
Also, the analyst added that the stronger U.S. dollar should be an estimated headwind of ~170 basis points.
The analyst expects April traffic to be up 5.0%, partly offset by an average ticket decline of 2.5% due to lower spend on discretionary items.
The analyst projects a digital sales decrease of 8.0% versus 5.7% last year as discretionary item demand is likely to remain soft in this tough economic environment.
The analyst expects Food & Sundries and Fresh Foods to outperform, helped by increased at-home consumption and inflation.
The analyst believes Costco to remain a share gainer, with its value-focused merchandising and high member loyalty.
Costco should continue to generate double-digit EPS growth, driven by a mid-single-digit comparable sale, high-single-digit membership fee income growth, leverage of customer data, and effective management of merchandising and costs, said the analyst.
Also Read: Costco's March Sales Dip: Analysts Attribute Decline To Sluggish Discretionary Spending
Price Action: COST shares are trading lower by 1.87% at $493.79 on the last check Monday.

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