Costco Wholesale posts
FeedPosted Nov 7th 2009 11:20AM by Tom Johansmeyer (RSS feed)
Filed under: Costco Wholesale (COST), Gap Inc (GPS), Federal Reserve, Recession
Consumer borrowing fell for the eighth straight month in September. This record-setting streak is due largely to tightening by lenders, unemployment and the conservative preference to pay down debt rather than spend. This widespread fit of fiscal responsibility, economists fret, could prevent a recovery from taking root, since consumer spending is responsible for 70% of the U.S. economy. This conventional thinking, of course, overlooks the fact that an eventual increase in spending that isn't fueled by consumer spending will yield a recovery that's more likely to last.
According to the Federal Reserve, borrowing fell at an annual rate of $14.8 billion in September -- it's biggest drop since July and much larger than the $10 billion predicted by economists. The behavior is exactly what you'd find in people worried about losing their jobs or focused on rebuilding safety funds and investment portfolios. Those who want to borrow are finding banks won't be complicit this time, as they clamp down on lending practices.
Continue reading Consumer spending falls victim to debt repayment
Posted Nov 6th 2009 11:40AM by Tom Johansmeyer (RSS feed)
Filed under: Wal-Mart (WMT), Target Corp. (TGT), Costco Wholesale (COST), Gap Inc (GPS), Nordstrom, Inc (JWN)
There's a chill in the air and a slight up-tick in confidence. Holiday discounts are coming a bit earlier, too. For retailers, this has been a great combination, leading to the second consecutive month in which retail sales increased.
This follows more than a year of drops. Consumers aren't going crazy, but they are loosening their wallets a little bit. Consumer spending accounts for 70% of the U.S. economy, and the coming holiday season is where the action is -- for the retail sector and, consequently, for everyone else.
Continue reading Retail sales: Signs of life, but not yet a rising tide
Posted Oct 7th 2009 2:20PM by Elizabeth Harrow (RSS feed)
Filed under: Earnings reports, Analyst reports, Good news, Costco Wholesale (COST), Options

Wall Street is cheering the latest earnings report from
Costco Wholesale Corporation (NASDAQ:
COST), with the shares adding more than 3% within the first hour of trading. This morning, as Tom Johansmeyer reported, the wholesale club reported a 6% slide in
fiscal fourth-quarter earnings, but the results nevertheless exceeded analysts' expectations.
In the wake of COST's report, analyst Brian Sozzi of Wall Street Strategies reiterated his Buy rating and $66 price target on the equity. "In our view, 4Q09 will go a long way in supporting a higher valuation for Costco," wrote Sozzi in a research note this morning. "The company has managed to control costs, drive traffic to its warehouses consistently throughout the economic downturn, paid $300 million in annual dividends in FY09 (payout ratio of 26.0% second to only Wal-Mart in the sector), and has catalysts on the horizon to showcase earnings power above currently modeled for consensus EPS."
Continue reading Costco Wholesale surges after topping 4Q expectations
Posted Dec 7th 2008 3:10PM by Elizabeth Harrow (RSS feed)
Filed under: Costco Wholesale (COST), S and P 500, Stocks to Buy
This post is part of a series featuring bargain stocks that are worth a look now. See more Cheap Stocks.
In troubled economic times, it seems like a no-brainer that discount retailers will fare better than their mid-market competitors. Of the discount group, Costco Wholesale (NASDAQ: COST) garners extra points for its brand recognition, broad geographic reach, and dedication to its customers.
Speaking of customer service, I recall being mildly shocked earlier this year upon reading this BusinessWeek article, which alleges that Costco often chooses to cater to its customer base rather than pleasing its investors. Amid skyrocketing commodity costs in July, the mega-retailer warned of a quarterly earnings shortfall, because of a reluctance to hike its own prices and potentially alienate its customer base.
I'm no CEO, but to my mind, the happiness of Costco's investors is directly pegged to how satisfied its customers are. If shoppers are turned off by price increases and take their business over to, say, Sam's Club -- what have the investors won? It takes a clear-headed management team to consider the long-term effects on its core customer base over the short-term demands of frustrated traders.
Continue reading Cheap Stocks: Costco Wholesale
Posted Nov 28th 2008 3:15PM by Steven Halpern (RSS feed)
Filed under: Newsletters, Costco Wholesale (COST), Stocks to Buy
"While many firms are struggling to survive, a lucky minority are built to weather the storm better," says growth stock specialist Karim Rahemtulla. In Xcelerated Profits Report, he eyes Costco Wholesale (NASDAQ: COST).
"Thanks to rising inflation and unemployment, coupled with a beaten-up economy, many retailers are braced for a harsh new reality this holiday season.
"Consumers have much tighter budgets and are cutting back on whatever they can. And that's where some 'one-stop' retailers like Costco can really take advantage.
"Although customers are more likely to avoid the electronics and other non-necessity stocking sections of the store these days, they still need to eat.
"So while other non-food departments are seeing a sales slowdown, Goldman Sachs recently reported that Costco is likely to enjoy strong food sales, which offset that.
"Goldman also noted that Costco boasts a strong balance sheet, with almost $3.3 billion in cash on the books, plus ample liquidity - factors that could encourage management to implement a stock buyback program.
"Compared to other retailers who are flat-out dreading this holiday season, that puts Costco in a strong position.
"And because the store has such a diverse range of products, all under one roof and available at bargain prices, Costco is one firm better prepared to ride out what could be a brutal season for retailers."
Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.
Posted Aug 15th 2008 5:44PM by Steven Halpern (RSS feed)
Filed under: Microsoft (MSFT), Intel (INTC), Exxon Mobil (XOM), Newsletters, Walt Disney (DIS), Costco Wholesale (COST), Staples Inc (SPLS), Lockheed Martin (LMT), Personal finance, Stocks to Buy
"I've always been a big fan of putting into the market on a regular basis regardless of what is happening in the overall market," explains Chuck Carlson, long considered one of the advisory industry's leading experts on dividend reinvestment plans.
Here, the editor of The DRIP Investor offers a 10-stock "autopilot" portfolio that is diversified among 10 high quality dividend-paying stocks and requiring a monthly investment of under $500.
Carlson says, "If I've learned anything in the more than a quarter of a century of following the markets, it is this fact - buying stocks when you know you should (i.e. during sharp down moves) is really difficult. Our heads says we should; after all, substantial market downturns create the best values.
"But our emotions usually take control, thus making it very difficult to pull the trigger and put money into the market when stocks are falling.
"That's why I've always been a big fan of 401(k) plans. With these investment vehicles, investment programs are put on 'autopilot,' with dollars being put into the market on a regular basis (usually each paycheck) regardless of what is happening in the overall market.
"Fortunately, investors can duplicate the autopilot feature of 401(k) plans with their DRIP investments by taking advantage of automatic monthly investment features provided by most DRIPs.
Continue reading 'Autopilot' portfolio: 10 stocks for long-term investors
Posted Aug 7th 2008 9:20AM by Peter Cohan (RSS feed)
Filed under: Wal-Mart (WMT), Costco Wholesale (COST), Limited Brands (LTD)
Bloomberg News reports that
Wal-Mart Stores, Inc. (NYSE:
WMT) and
Costco Wholesale Corp. (NASDAQ:
COST) saw big sales increases in July thanks to $4 gas, while more upscale retailers, such as
The Limited Brands (NYSE:
LTD), lost business. The stock market is responding to the change and so far this year, Wal-Mart shares are up 27.8% but Costco's have fallen 5.8% (thanks to a
profit squeeze due to its gasoline costs rising faster than the price it charges consumers). Limited stock has lost 10.8% during that time.
The details are worth knowing. Wal-Mart sales at stores open at least a year gained 3% while Costco's climbed 10%. Limited, the owner of the Victoria's Secret lingerie chain suffered a 5% decline. But Wal-Mart's results -- while strong -- were disappointing to investors who expected 3.4% growth. What is driving this increasing budget-consciousness? The beginning of back-to-school shopping, the suspension of sales taxes in some states, $4 a gallon gas, 9.6% inflation and seven months of job losses are all combining to push shoppers to discounters and away from pricier retail outlets.
Continue reading $4 gas sends Wal-Mart, Costco up; Limited down
Posted Jul 23rd 2008 10:36AM by Brian White (RSS feed)
Filed under: Forecasts, Wal-Mart (WMT), Costco Wholesale (COST)
Costco Wholesale Corp. (NASDAQ:
COST) warned Tuesday that
profit for the quarter ending in August would be "well below expectations." That statement comes as a surprise. The company that should be benefiting greatly from customers buying in bulk and "trading down" to lower-priced goods, issues lower guidance in the thick of a depressed U.S. economy.
The wholesaler said that analyst estimates of a $1 per share profit would not be met, and then quickly talked about how rising energy prices would be to blame. Costco kept its prices steady even as its own costs have risen. It also experienced diminished profit in gasoline sales. The good news is that Costco's same-store sales have not trended downward recently. The company is still making a healthy profit, but the question is why it is holding many prices steady even as costs and transportation backend prices rise?
One answer is
Wal-Mart Stores, Inc. (NYSE:
WMT) and its Sam's Club operations. While in a Sam's Club just this past weekend to check out prices, I was amazed to see that once inside the store, any semblance to a credit, mortgage and credit crisis was gone. Prices were lower than ever on many items, and Wal-Mart faces the same kind of financial cost pressures as its competitors. It can afford to keep prices lower even through tough times, though. Costco has to keep up, and as a result, its profits will take a hit.
Posted Jul 20th 2008 5:45PM by Peter Cohan (RSS feed)
Filed under: Wal-Mart (WMT), Costco Wholesale (COST)
The Associated Press reports that a "Depression Era" mentality is taking hold among consumers. This matters to the overall economy since 70% of Gross Domestic Product (GDP) growth depends on consumer spending. Maybe this is good news because it will make people care more about spiritual matters, and less about material ones.
AP bolsters its consumer mentality shift with excerpts from a Nielsen survey that interviewed 50,000 consumers by e-mail during the first week of June. The survey found that
- 63% of consumers are cutting spending due to rising gas prices, up 18 percentage points from a year ago;
- 78% of consumers are combining shopping trips;
- 52% are eating out less often;
- Consumers are cutting more coupons;
- They do more of their shopping at super centers; and
- They buy less expensive brands.
Continue reading A 'Depression Era' mentality takes hold of consumers
Posted Apr 17th 2008 4:58PM by Steven Halpern (RSS feed)
Filed under: Newsletters, Costco Wholesale (COST), Stocks to Buy
"Finding its way onto the short-term bullish list is discount retailer Costco Wholesale (NASDAQ: COST), our 'focus stock of the week'," says Chris Johnson in his contrarian advisor service, Insightful Investor.
"The warehouse giant is currently seeing a positive mix of technical strength along with growing pessimism that makes it a potential outperformer. Costco is one company that has maintained a level of demand not seen throughout the bulk of the retailing sector.
"COST's core business, which caters to small businesses and households willing to buy in bulk, has maintained strength despite the slowing economy. In fact, the company's latest earnings report, released March 5, beat analyst expectations by 23%.
"Reflective of its fundamental strength, COST's stock price has remained a relative strength leader by trading above its 50-day moving average. The equity has outperformed not only most of its peers in the retail group, but the overall market as well.
Continue reading Costco: 'Best of breed' discount retailer
Posted Mar 6th 2008 9:57AM by Eliza Popescu (RSS feed)
Filed under: Wal-Mart (WMT), Costco Wholesale (COST), Economic data, Limited Brands (LTD)

With recession fears, housing market worries and credit concerns, retailers have been facing tough times, especially during the holiday winter season of December and January when sales came with weak numbers. But on the heels of these disappointing results, retailers got a beam of hope as February's sales numbers showed a surprising increase.
Encouraging news for retailers showing a rebound in consumer spending during the past month came after world's largest retailer
Wal-Mart Stores Inc. (NYSE:
WMT) announced
a rise of 2.6% for its February same-store sales. The company said that its same-store sales during the period were helped by strong gains from gas, food and flat-panel TVs. Analysts were expecting the retailer show an increase of 1.1% for its same-store sales, according to Thomson Financial.
Among other retailers that showed a
rebound in February sales were
Costco Wholesale Corp. (NASDAQ:
COST) and
Saks Inc. (NYSE:
SKS), both of which reported stronger-than-expected gains. Apparel retailers
Pacific Sunwear of California Inc. (NASDAQ:
PSUN) also reported earnings results exceeding estimates of 6% sales growth last month.
For
Limited Brands Inc. (NYSE:
LTD), though, February didn't come with positive results. The company stated that higher energy and food prices put pressure on consumers who focused on necessities.
Eliza Popescu is a financial writer for the online investment advisory service Investor's Observer.Next Page >