Can Costco's 6% May Comparable Sales Fuel a Strong Q4 Start?
Costco Wholesale Corporation 's COST 6% increase in May comparable sales signals a promising start to the fourth quarter of fiscal 2025. This figure, which excludes gasoline price fluctuations and foreign exchange impacts, follows April's 6.7% and March's 9.1% gains. While the trend suggests a gradual deceleration, the overall trajectory remains firmly positive.
The U.S. market saw a 5.5% comparable sales increase, while Canada and Other International regions delivered 6.3% and 8.4% gains, respectively, excluding gasoline price fluctuations and foreign exchange impacts. These results indicate that Costco's strength isn't just domestic but global. Meanwhile, the 12% surge in e-commerce comparable sales further underscores demand across digital channels.
The May data confirms Costco's ability to maintain sales traction at a time when many retailers are grappling with unpredictable consumer behavior. This ongoing momentum, particularly across different geographies and channels, suggests the potential for Costco to finish the final quarter on a decent note.
Total company comparable sales, including the effects of gasoline prices and foreign exchange rates, rose 4.3% during May. As a result, Costco's net sales for May increased 6.8% to $20.97 billion, up from $19.64 billion in the same period last year.
While May's results don't promise a spectacular quarter, they point to good progress so far. If underlying demand holds up, Costco could carry forward the momentum. However, it is to be seen how the company navigates volatile macro headwinds and tariff complexities in the final stretch of fiscal 2025.
How Are Costco Peers DG & TGT Keeping Up With Sales?
Dollar General Corporation DG reported a 2.4% increase in first-quarter fiscal 2025 same-store sales, driven by a 2.7% rise in the average transaction amount, though partially offset by a 0.3% decline in customer traffic. Dollar General saw growth across all key product categories, including consumables, seasonal, home products and apparel. Dollar General now expects same-store sales to rise between 1.5% and 2.5% compared to its prior forecast of 1.2% to 2.2%.
Target Corporation TGT experienced a 3.8% decline in comparable sales, following a 1.5% increase in the preceding quarter. This drop was attributed to a 5.7% fall in Target's comparable store sales, which was somewhat offset by a 4.7% increase in comparable digital sales. Target highlighted that traffic, or the number of transactions, dropped 2.4%, and the average transaction amount decreased 1.4%.
Costco's Price Performance, Valuation and Estimates
Costco stock has been a standout performer, with shares rallying 10.7% year to date, outpacing the industry 's growth of 6.3%.
From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 52.14, higher than the industry's ratio of 33.53. COST carries a Value Score of D.
The Zacks Consensus Estimate for Costco's current financial-year sales and earnings per share implies year-over-year growth of 8% and 12%, respectively.
Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
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