Costco Keeps Rolling Through the Holidays

The warehouse giant's December sales trends looked strong.


Demitrios Kalogeropoulos, The Motley Fool 

Jan 11, 2020


Costco (NASDAQ:COST) is a consumer staples retailer, with most of its sales occurring in routine shopping categories like groceries and fresh foods. That differentiates it from Amazon, which gets the majority of its revenue from discretionary items like consumer electronics. The warehouse giant also gets most of its earnings from membership sales rather than product markups, which makes it operate more like a club than a traditional retailer.


Those two factors mean that the holiday shopping period isn't as much of a make-or-break moment for Costco as it is for many retailers. Yet that season is still important to Costco's annual results, so investors look forward to the retailer's December sales update each year.


That report came on Wednesday, and it points to continued positive momentum for the warehouse retailing leader.


Growing strong


Sales for the five weeks that ended on Jan. 5 jumped 10.5% to $17.04 billion, management revealed. After adjusting for new store openings and volatile price changes on gasoline, that growth figure landed at 7.8%. That's well above the 5% that Costco reported for its most recent full quarter and far higher than the 3% comps that peers like Walmart have been posting.


Investors can't conclude that Costco is running away with all the holiday sales growth, though. A quirk of the calendar pushed the high-volume shopping period around Black Friday a week later this year, and executives estimate that this move had a significant positive impact on reported sales in December. In fact, 20 percentage points of Costco's blistering 43% e-commerce growth likely came from the calendar shift. Likewise, the timing move pushed total sales and comparable-store sales higher by a full percentage point.


Zooming out reveals a less eye-popping growth figure that still translates into market share gains. Costco's adjusted comps are up 6.5% over the past 18 weeks in the U.S. market. That figure stood at 5% for the fiscal first quarter, which ended right before Black Friday. In other words, it's a good bet that Costco improved on the impressive 3.4% customer traffic increase it logged in Q1.


What we don't know ...