Here’s Why Costco Stock Is Worth Watching


Costco Wholesale Corporation (NYSE:COST), a well-known name in the retail discount industry, has had a solid year thus far on the exchange. The company has outperformed the Retail-Discount industry due to its operational strategies, which include a customer-centric strategy, an emphasis on the membership program, and a focus on value products. During the same time period, Costco stock rose 9.1%, while the industry rose 2.6%.

Let’s Dive In

Based on the breadth and quality of items sold, this Issaquah, WA-based company remains one of the major warehouse merchants. Costco’s unique membership business strategy and pricing power set it apart from the competition. In the face of escalating prices, low-to-middle-income consumers have favored cheap stores over traditional businesses. These elements have all contributed to Costco’s strong sales performance.

Costco’s net sales grew 3% year on year to $17.85 billion for the retail month of April – the four-week period ending April 30, 2023 — from $17.33 billion. This came after gains of 0.5% and 4.7% in March and February, respectively. In the retail month of April, comparable sales grew 1.4%.

To deliver a smooth shopping experience, Costco is increasingly adopting the omnichannel ethos. Its acquisition of Innovel Solutions, a major provider of third-party end-to-end logistics solutions, now known as Costco Logistics, has increased its e-commerce capabilities and allowed it to offer “big and bulky” items.

The company’s e-commerce capabilities have been gradually expanded in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan, and Australia.

Costco is also devoted to opening new locations in both local and international markets. The company’s diversification approach, in our opinion, is a natural hedge against dangers that may occur in individual markets. Costco expects to open 24 net new warehouses in fiscal 2023, after opening 13, 20, and 23 net new warehouses in fiscal 2020, 2021, and 2022, respectively.

We anticipate an increase in membership fees as the number of new warehouse openings increases. In the second quarter of fiscal 2023, membership fees grew 6.2% to $1,027 million.

Finishing Up

Costco’s strategy of selling products at reduced costs has helped them attract customers who are looking for both value and convenience in the face of rising prices. We anticipate that an expanding client base and good renewal rates will drive sales. The Consensus Estimate for Costco’s current fiscal-year sales and earnings per share predicts an increase of 6.5% and 9.2%, respectively, over the previous year’s reported figures.

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About the author: Stephanie Bédard-Châteauneuf has over seven years of experience writing financial content for various websites. Over the years, Stephanie has covered various industries, with a primary focus on tech stocks, consumer stocks, market news, and personal finance. She has an MBA in finance.