Costco Evades Amazon-Inspired Gloom As Sales Beat Estimates
Costco Wholesale Corp. bypassed the funk pervading the retail industry in the wake of Amazon.com Inc.’s deal for Whole Foods Market Inc., as its treasure-hunt shopping experience shows no sign of consumer fatigue.
Costco posted same-store sales for June that far exceeded analysts’ estimates, sending shares up as much as 2.1 percent to $161.35 in New York.
The company’s sales have outpaced big-box rivals like Wal-Mart Stores Inc., Target Corp. and the brick-and-mortar retail industry in general as foot traffic slows and consumers continue to migrate to digital alternatives, particularly Amazon. The online giant’s $13.7 billion acquisition of Whole Foods sent food retailers’ shares plummeting on concerns that Amazon would grab more of the $800 billion grocery market.
“The results indicate Costco can coexist with large hardline competitors like Wal-Mart and have limited cannibalization from Amazon,” said Mark Astrachan, an analyst at Stifel Nicolaus & Co., who has a buy rating on the company’s shares.
Excluding fuel and currency swings, U.S. same-store sales climbed 6.3 percent last month, the company said late Wednesday. That compares with analysts’ average 3.9 percent projection. Highlights during the month were sales of tires, jewelry, meat and candy, the company said, illustrating Costco’s broad assortment of low-priced goods.
Citing notable traffic growth, Wells Fargo & Co. analyst Zachary Fadem raised his same-store sales estimate for the fourth quarter. He has a market perform rating on Costco.
Shares of Issaquah, Washington-based Costco had declined 1.3 percent this year through Wednesday’s close.