Why Costco’s monthly sales miss doesn’t change our view

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A consumer buys at a Costco store on September 28, 2021 in Miami, Florida.

Joe Riddle Getty Images

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Costco, a stock we own for the charity, reported sales numbers for the November retail month following the closing bell on Wednesday night.

Remember, Costco’s reporting structure is not similar to most public companies. In an era where quarterly reporting has become the norm, Costco stands out as one of the few that reports its monthly sales results in addition to its regularly scheduled earnings reports. We value this transparency because it updates investors on the state of the business.

Over the four-week period, net sales increased 15.7% year-over-year to $ 18.13 billion. A strong result, but in-store sales (also known as comparative sales, or comps) is the metric we want to focus on because it provides the greatest insight into business trends.

  • Total parallel sales increased by 14.1% in November, in the absence of estimates of 15%.
  • Similar sales analysis helps us understand if the company can attract more customers and sell them more merchandise.

In the Costco report, you will also notice a second measurement of similar sales. The second component does not include the effect of changes in gasoline prices and foreign exchange. We consider them “core warehouses” because they remove the impact of items beyond the control of the company. We think core comps tell the better story.

  • During the period, Costco’s total core increased by 9.2%.
  • In the United States, core companies rose 9.1%, missing estimates of 11.4%, While Canada rose by 7.6% and the other internationalists rose by 11.3%.

Online sales growth slowed With the e-commerce core rising 11.7%, but one thing to keep in mind is that the company continues to face a tough comparison from a year ago.

Bottom line: Costco recorded another strong monthly sales result, but unfortunately, the retailer broke its winning streak with better-than-expected numbers. A small miss had to occur at some point, and we define it as nothing more than expectations made a little too bullshit.

With core rates still rising by about 9% for the company as a whole in November, we see no reason to change our thesis that Costco is gaining new customers and gaining market share.

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