Costco reported an 11.4% increase in same-store sales for September, with core comps rising 7.6% when excluding gas and currency effects. This growth is notable as it reflects the company's resilience in a challenging economic environment, where consumers are increasingly focused on value.
Jim Cramer expressed optimism about Costco's performance, especially given that the growth rate improved from August and was driven by strong U.S. sales, which saw an 8% increase when gas sales were excluded. The company's gas business, while not highly profitable, plays a crucial role in attracting customers to its warehouse locations.
Analysts from UBS echoed Cramer's positive sentiment, attributing the strong sales to Costco's strategic investments in lower prices following a $184 million tariff refund, with expectations of further price reductions as additional refunds are anticipated. Furthermore, Costco's expansion of delivery options through partnerships with DoorDash and Uber Eats is seen as a potential growth driver.
However, Wolfe Research cautioned that while the sales growth exceeded expectations, it was influenced by the timing of Labor Day Weekend, suggesting that core comps might have been closer to 7.3% without this factor. Concerns about slowing membership growth and renewal rates remain, which could impact future performance.
Overall, Costco's stock has shown resilience, gaining over 5% since its fiscal Q4 results, despite trading at a high price-to-earnings ratio of over 41 times forward earnings estimates