Costco Wholesale Corporation (NASDAQ:COST, XETRA:CTO) reported stronger April sales growth, prompting Bank of America to reiterate its Buy rating and maintain its $1,185 price target on the retailer, citing continued comparable sales consistency despite ongoing macroeconomic uncertainty.
Shares of Costco traded up 1.3% at $1,008 on Thursday afternoon.
For the four weeks ended May 3, Costco reported total sales growth of 13% US comparable sales excluding gasoline prices rose 8%, while total company comparable sales excluding gas and foreign exchange effects increased 7.8%.
Adjusting for the Easter calendar shift, US comparable sales excluding gas and foreign exchange rose 6.3% in April. That represented a slowdown from March’s 7.7% increase, though Bank of America noted the retailer’s two-year stacked comparison improved.
Total company traffic was described as roughly stable month over month after accounting for the holiday timing shift.
Average ticket growth excluding gas inflation and currency effects slowed to 3.4% from 4.6% in March, which had benefited from pre-Easter purchasing activity. The bank said Costco’s sales comparisons are expected to ease in May and June.
Bank of America said Costco’s “philosophy of leading with value” continues to support market share gains across categories and highlighted the company’s resilience during a period of economic volatility.
The retailer’s ancillary business showed stronger momentum during the quarter-to-date period, driven largely by gasoline sales.
Gas price inflation added roughly 320 basis points to total comparable sales growth in April, while the average worldwide selling price per gallon increased 26.7% year over year.
Costco’s gas business grew in the low-40% range, supported by both higher prices and increased volumes. Ancillary comparable sales, which include gasoline, were in the mid-30% range for March and April combined.
Within merchandise categories, non-foods comparable sales grew at a mid-single-digit to high-single-digit pace quarter to date, while Food and Sundries comps remained at the low end of mid-single-digit growth. Fresh category sales growth slowed slightly compared with the prior quarter.
Bank of America noted that inflation in Food and Sundries remained in the low-single-digit range, partly weighed down by deflation in egg and dairy prices, while Fresh category inflation was in the low- to mid-single-digit range. The firm added that the impact from egg deflation could continue for the next several months.
Regionally, Costco’s strongest US performance came from the Midwest, Southeast, and Northeast. In Canada, comparable sales excluding gas and foreign exchange accelerated to 7.6% in April.
Other international markets posted 6.5% comparable sales growth, largely in line with March levels.
E-commerce sales also remained strong, with digitally enabled comparable sales rising 18.4% excluding foreign exchange effects.