Costco December Sales Review: Analyst Expects Traffic To Remain Solid As Consumers Search For Value

Shares of Costco Wholesale Corp COST are up 47% over the past year.

On Thursday, the company reported a 9.9% year-on-year increase in retail sales to $26.15 billion for the five weeks ended Dec. 31, 2023.

December sales report was strong, with a headline comp of 8.5% and a core merchandise comp of 8.1%. Excluding the timing of New Year’s Day — an extra shopping day in December — that helped the comp by
~300 bps, the adjusted headline comp was 5.5%. The adjusted headline comp far exceeded Telsey Advisory Group’s target of 2.0%.

Also Reading: $1000 Invested In Costco Wholesale 15 Years Ago Would Be Worth This Much Today

The Costco Wholesale Analyst: Telsey Advisory Group analyst Joseph Feldman maintains Outperform on Costco stock with a price target of $700.

The Costco Wholesale Thesis: Costco’s impressive December performance surpassed expectations in both comparable sales and traffic. It reflects its resilience in an uncertain market landscape.

The company’s adept execution remains consistent, positioning it as a continued leader in market share, bolstered by robust sales and a substantial membership base of approximately 130 million.

Looking ahead to Fiscal Year 2024, Feldman anticipates Costco to sustain solid earnings per share (EPS) growth. Expect a moderate-to-strong comparable sales increase, substantial growth in membership fees, utilization of customer data, and efficient cost management strategies.

The January sales forecast predicts a slight decline in comparable sales due to factors like gas and foreign exchange effects. But core merchandise sales, excluding these influences, remain steady.

Despite short-term challenges, Feldman expects sustained solid traffic, up 3.0%, as consumers seek value. Costco’s strategic resilience and strong fundamentals position it as an enticing investment opportunity, poised for continued growth despite temporary market fluctuations.

COST Price Action: Shares of Costco Wholesale had risen by 1.27% to $656.57 at the time of publication on Friday.

Also Read: Retail Giant Costco Posts 9.9% Jump in December Sales

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