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Costco August Sales Jump 15% As E-Commerce Explodes 102% - TipRanks Financial Blog
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Costco August Sales Jump 15% As E-Commerce Explodes 102%

Costco Wholesale said net sales spiked 15% in August as shoppers are returning to the stores and e-commerce revenue continues to accelerate.

Costco’s (COST) reported net sales of $13.56 billion for the four weeks ended Aug. 30, up from $11.79 billion last year. In the fourth quarter ended Aug. 30, the retailer generated net sales of $52.3 billion, an increase of 12.7% year-on-year, exceeding the $51.9 billion analysts had forecast. Comparable sales in the fourth quarter rose 14.1% compared with the 9.8% expected by analysts.

In addition, e-commerce sales jumped 102% during the retail month of August. On a geographical breakdown comparable sales, excluding the impacts from change in gasoline prices and foreign exchange, last month advanced 14.3% in the US, 15% in Canada, and 15.4% in other global markets.

For the 52-week fiscal year ended Aug. 30, the company reported net sales of $163.2 billion, an increase of 9.2% from the $149.4 billion during the similar period last year.

Earlier this year, Costco had suffered from a sales drop as stay-at-home orders and social distancing restrictions have led to a traffic decline at its warehouses, while e-commerce revenue wasn’t enough to offset the trend during the outbreak of the coronavirus pandemic.

Oppenheimer analyst Rupesh Parikh last month reiterated a Buy rating on the stock after hosting a virtual call with senior management, saying that COST remains a top pick.

“Right now, the company is really firing on all cylinders, in our view, benefiting from its leading value position in the grocery category, increased consumer appetite for at home related products, and accelerating growth in e-commerce,” Parikh wrote in a note to investors. “Going forward, we believe share gains could be stickier than most given the company’s superior value proposition, merchandising efforts in categories such as white goods, price investments, digital efforts, and benefits from a large number of retail bankruptcies.  

The analyst, who has a Street-high price target of $400 (11.5% upside potential) on the stock, sees prospects for “double-digit upside” and continues to forecast a special dividend of $10- plus in coming quarters. (See Costco stock analysis on TipRanks).

Meanwhile, the rest of the Street has a cautiously optimistic outlook on the stock. The Moderate Buy analyst consensus is based on 16 Buy ratings versus 7 Hold ratings.

With shares up 22% so far this year, the $352.88 average analyst price target implies 1.7% downside potential in the coming 12 months.

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Sharon Wrobel
Sharon Wrobel is a journalist and writer with two decades of experience covering financial news in the U.S., Europe and the Middle East. Her work has appeared in global publications including The Financial Times, Bloomberg and The Jerusalem Post.

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