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Costco’s Stellar Sales Exceed Walmart and Target

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Apr. 2 2018, Published 10:54 a.m. ET

Industry-leading comps

Costco (COST) continues to generate stellar sales growth despite increased competition. Costco recorded double-digit sales growth for the past three quarters, reflecting industry-leading comps or comparable-store-sales.

Costco’s impressive sales performance comes as investors fear the combination of Amazon (AMZN) and Whole Foods to adversely impact Costco’s business. Meanwhile, peers Walmart (WMT) and Target (TGT) significantly ramped up their digital platforms, posing further challenges for Costco.

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Costco performed better than Walmart and Target

As we stated earlier in this series, Costco continues to report an industry-leading comps rate. For the last reported quarter, Costco’s comps rose 8.4%, driven by strong traffic (+3.7% worldwide and +3.4% in the United States) and a higher transaction size (+4.6%).

Costco’s comps increased 7.1% in the United States, 8.7% in Canada, and 15.7% in other locations.

In comparison, Walmart’s US segment reported comps growth of 2.6% for the last reported quarter. Walmart US segment’s traffic increased 1.6%, and its average ticket size improved 1.0%. Target’s comps grew 3.6% during the last reported quarter, reflecting impressive growth in traffic (+3.4%).

Outlook

Analysts expect Costco to continue to report healthy net sales growth, driven by impressive comps. Meanwhile, Walmart’s net sales growth rate is expected to see low-single-digit growth as the closure of 63 Sam’s Club stores and the removal of tobacco from certain stores is expected to hurt its top-line growth rate. Target’s comps are also expected to register low-single-digit growth in the coming quarters.

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