Costco Gains Momentum Even As Market Wrings Its Hands Over The Amazon Threat

Costco Wholesale Corporation COST’s August same-store sales were up 7.3 percent, and net sales in the month finished at $9.8 billion, exceeding expectations.

The same-store sales number beat Deutsche Bank’s projection of 5 percent, analyst Paul Trussell said in a Wednesday note.

The wholesale club’s momentum has outpaced expectations in recent months, but Costco faces increasing competition, including from Amazon.com, Inc. AMZN, which announced price cuts at Whole Foods, Trussell said.

Deutsche Bank maintains a Hold on Costco with a $172 price target. The bank is remaining “sidelined” on the stock and closely monitoring both membership growth and renewal rates at Costco, the analyst said.

A Strong August

Costco’s traffic was up 3.9 percent and 4.3 percent in the U.S., higher than Deutsche’s projection of 3.75 percent. With prices up 12 percent year-over-year, gas added 110 basis points to Costco’s single-store sales, according to Deutsche.

Comparable e-commerce sales in August rose 26 percent, the firm said.

Core comp excluding gas was up 6.1 percent in the U.S. in August after a 5.5-percent increase in July. Deutsche had projected Costco’s core comp in the month at 4.9 percent; the Street was expecting 4.7 percent.

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