We're locking in a big profit on our favorite retail stock after softer sales figures

Published Thu, Dec 1 20228:51 AM ESTUpdated Thu, Dec 1 20228:57 AM EST

We're selling 55 shares of Costco (COST) at roughly $523.80. Following Thursday's trade, Jim Cramer's Charitable Trust will own 110 shares of Costco, decreasing its weighting in the portfolio to 2% from 3%. Costco reported retail sales for November Wednesday night — and for the first time in a long time, the results showed some weakness. To be fair, global comparable sales for the four-week period increased 4.3% — or 5.3% on a core basis, excluding the impacts from changes in gasoline prices and foreign exchange. But the core results represented a big miss from the 8.5% consensus estimate and represented a notable deceleration from October's 6.7% core increase. By category, food and sundries continued to be a source of strength for the retailer with positive low double-digit growth and fresh foods were up mid-single digits, but non-food items comparable sales declined in the low single digits with notable weakness in consumer electronics, jewelry and hardware. As much as we consider Costco a high-quality name and the best operator in all of retail due to its supply chain excellence and the value it provides to customers, we are turning a little more cautious about the name in the short term just in case November marks the beginning of a comparable sales slowdown. It's too early to tell if November was below trend due to the highly promotional environment across all of retail, but the year-over-year comparables are only going to get tougher from here as Costco laps gains related to gasoline and food inflation, and a weakening consumer in 2023 could present further challenges. Therefore, we believe it is prudent to lock in some of our big gains and downgrade our rating to 2 until we know more. This sale will lock in a huge gain of about 70% on stock purchased in February 2020. Costco reports its quarterly financial results this coming Tuesday. (Jim Cramer's Charitable Trust is long COST. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust's portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Pedestrians walk near the New York Stock Exchange in New York on Feb. 16, 2016.

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