Costco (COST.US) reported strong September sales, with a 9.3% increase in U.S. region core comparable sales and a 7.6% increase in traffic. The company's management noted that Hurricane "Hernane" and consumer concerns about port strikes boosted September's comparable sales.
Oppenheimer noted that non-food items, driven by gold bar and gift card purchases, remained a highlight for Costco in September, growing again by slightly more than 10%. Analyst Rupesh Parikh emphasized that Costco continues to expect strong performance growth in the second half of the year, driven by its outstanding merchandise sales and its unique value proposition. He added: "We also believe that Costco's membership count may see N-T level growth due to stricter membership card checks.”
Looking forward, Jefferies analyst Corey Tarlowe believes that Costco's sales in October may be boosted by Hurricane "Milton", while UBS analyst Michael Lasser said that Costco's attractive value proposition, combined with more innovation and newness, plays to its strengths, allowing its customers to continue to shop at Costco at an increasingly faster pace, "In addition, the improvement of Costco's logistics delivery platform and digital shopping experience makes its members' digital engagement continue to rise.”
Looking forward, Costco will continue to innovate. Costco plans to open a store on the first floor of an 800-unit apartment building in Los Angeles, marking the company's first presence in a mixed-use building. The smaller store will have a pharmacy and an optometrist, possibly leading the way for a new Costco format.