Costco Stock Approaches a New All-Time High After Strong April Sales

Investors have shaken off their worries about Costco stock again, thanks to an excellent April sales report.


Adam Levine-Weinberg, The Motley Fool

May 13, 2019


Shares of Costco Wholesale (NASDAQ:COST) dipped briefly last month after the discount warehouse club operator reported somewhat disappointing sales results for the retail month of March. This made some investors worry that Costco's sales momentum could be dissipating.


However, the company reassured investors about its sales trajectory last Wednesday, reporting strong April sales. This enabled Costco shares to gain ground last week, even as the broader market fell 2%. Indeed, Costco stock ended the week within 1% of its all-time high.


Costco bounces back after a modest growth slowdown


Costco posted a 5.9% comp sales increase in March, excluding the impact of foreign currency fluctuations, gasoline price inflation, and the impact of new revenue recognition rules. (All comp sales results discussed here incorporate these adjustments.) However, the company had one extra sales day during the month, due to the timing of Easter. Management estimated that this boosted comp sales by between 1 and 1.5 percentage points.


Thus, Costco's comp sales growth would have been a little below 5% without the Easter shift. Most retailers would be delighted with a result like that, but Costco shareholders were hoping for more. In the first half of fiscal 2019, comp sales rose about 7% year over year.


In April, Costco had one fewer selling day than in the prior-year period, again because of the timing of Easter. This headwind reduced comp sales growth by 1.5 to 2 percentage points, which made the company's 5.2% comp quite impressive. Traffic rose 3.3% year over year, including a 3.5% increase in the U.S., driving most of Costco's comp sales gain.


Adjusted for the Easter shift, Costco returned to its previous sales trend, with roughly 7% comp sales growth last month. And taking March and April together -- which eliminates the impact of Easter -- Costco achieved a solid 5.6% comp sales gain, consisting of a 5.6% increase in the U.S., 4.6% growth in Canada, and a 6.7% jump in its other international markets.


Consistent performance across the company ...


Costco is unstoppable ... 


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