Costco's January SSS Up 9%, Citigroup Maintains Hold

Citigroup has published a research report on Costco Wholesale Corporation COST after the company reported better than expected January same store sales that increased by +9%. In the report, Citigroup writes "COST reported January SSS of +9%, above our 6 to 8% estimate, above consensus of +6.0%, and vs. +8.0% last year. SSS at domestic clubs were up +6%, while comps at the international clubs increased +16%. Gasoline inflation positively impacted total comps by about +135 bps, and foreign exchange rates benefited total comps by +125 bps (both a bit higher than in recent months). Traffic rose approximately 4.5% in January, and the average transaction size increased over +3.5% (incld. gas and FX). Cannibalization was (-40) bps. COST estimates that adverse weather conditions in many regions within the U.S. and Canada negatively impacted January comps by approximately (-100) to (-150) bps. We have a Hold (2M) rating for COST and TGT (1M rating) is one of our top picks." Citigroup maintains its Hold rating and $65 price target. Costco Wholesale closed yesterday at $70.85.