Costco’s December sales beat shows the Club holding is still the retailer to own

Published Fri, Jan 6 20231:36 PM ESTUpdated Fri, Jan 6 20236:17 PM EST

Club holding Costco Wholesale (COST) delivered strong sales growth in December, demonstrating the retailer's ability to consistently attract customers despite gathering economic headwinds. For the 5 weeks ended Jan. 1, Costco's net sales increased 7% year-over year, to $23.8 billion, the company reported Thursday. Total comparable sales, which excludes the impact of fluctuations in gasoline prices and foreign exchange, increased 7.3% in December, ahead of Wall Street's expectations for 5.7% growth. Shares of Costco soared nearly 7% in midday trading Friday, to roughly $481 apiece. Costco's December sales were driven by food and sundries, followed by fresh foods. Meanwhile, sporting goods, tires and apparel outperformed, while discretionary goods like electronics and housewares underperformed. Costco's ecommerce sales declined 5.4%, compared with an 8.9% drop in November. This coincided with higher global store traffic in December, which increased by 4.6% year-over-year, compared with 3.4% growth in November. In a research note Friday, analysts at UBS applauded Costco's "strong improvement" sequentially, but said they "expect demand to remain choppy in the near-term as consumers continue to face higher costs and depleting savings." Still, the analysts said the retailer "should be well positioned in this environment, and... see upside to shares at current levels." The Club take Costco had a softer November sales report, with sales growing by 5.7% year-over-year, which sparked concerns over a slowdown in consumer spending. That put pressure on the stock, which tumbled more than 9% last month. But the wholesale retailer's bounce back in December sales shows Costco is still delivering value to its members, particularly amid the busy holiday shopping season. While Costco isn't immune to the inflationary pressures squeezing consumers, the company has stellar management that consistently posts top-line sales growth. We're also anticipating a potential membership-fee increase and a special dividend this year, two would-be positive catalysts for the stock. We maintain that Costco is the best-run retailer in the world, ably serving both customers and shareholders. (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.

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Club holding Costco Wholesale (COST) delivered strong sales growth in December, demonstrating the retailer's ability to consistently attract customers despite gathering economic headwinds.