Costco delivers another shock and awe sales report
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Evercore ISI said Costco Wholesale Corporation (NASDAQ:COST) did the impossible in January by accelerating two-year comparable sales trends at a time in which most retailers are decelerating.
Analyst Greg Melich's numbers dive: "The 2-year global core comp (+26.5%) & the U.S. core comp (+25.9%), accelerated +410bps & +340bps sequentially. Comp traffic decelerated 40bps to +9.4%, but accelerated +280bps on a 2- year basis."
Melich noted that Costco's (COST) loyalty model wins share and capitalizes on the strength of the upper end consumer. Customers are also said to have noticed that Costco (COST) has maintained a strong value offering.
What about inflation costs? Costco (COST) stated that inflation was consistent with December levels, which Melich called significant due to the fact that inflation costs in December and November moderated sequentially from October. "If Costco can continue to successfully mitigate the effects of inflation relative to the market, the bulk retailer should continue to drive incremental membership growth," reasoned the analyst.
After taking in the sales update, Evercore reiterated its Outperform rating on Costco (COST) and lifted its price target to $575.
Shares of Costco (COST) fell 0.58% in premarket action to $519.00.
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