Value Shoppers Still Show Up, But Costco's Growth Hits Speed Bump

Costco Wholesale Corp COST has been in focus with tariffs expected to have the worst impact on apparel and home furnishings.

The company is scheduled to report its March sales on Wednesday, April 9.

The company could announce a deceleration in total comps for the month to 2.5%, from 7.7% last year, according to Telsey Advisory Group.

The Costco Wholesale Analyst: Analyst Joseph Feldman reiterated an Outperform rating and price target of $1,000.

The Costco Wholesale Thesis: Gas prices declined by high single digits in March, which is likely to result in a comp headwind of around 80 basis points (bps), Feldman said in a note.

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Strength in the U.S. dollar could translate to an additional headwind of around 170 bps, he added.

"We expect traffic to be up 2.5% vs. 7.2% last year, as consumers visit more frequently in search of value," the analyst wrote.

Costco Wholesale's digital sales growth is expected to have decelerated to 5%, from 28.3% last year, he stated.

Non-Food sales could outperform, with consumers shopping for certain discretionary categories such as gift cards, while Food & Sundries and Fresh Foods sales are expected to "remain solid, given favorable at-home consumption and the value-focused assortment," Feldman further said.

COST Price Action: Shares of Costco Wholesale had declined by 2.73% to $942.91 at publication on Friday.

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