Wholesale delivered another strong month of sales in November, but the growth wasn’t as hot as Wall Street has become used to.
Costco (ticker: COST) said that same-store sales excluding fuel and foreign-exchange fluctuations rose 14.6% in the four weeks ended Nov. 29; U.S. comparable sales rose 14.2%. E-commerce comps were up 70.9% for the month.
The stock was down 1.1% to $379.32 in premarket trading, while the
Dow Jones Industrial Average
were marginally higher.
While the discounter’s results were certainly robust, they likely fell short of investors’ hopes in a few key respects. Consensus estimates for total and U.S. comparable-sales growth were both over 15%. Costco has been notching double-digit increases well above expectations since the summer, and in turn analysts have kept moving their estimates higher. Optimism about the month may have been fueled by the early start to the holiday shopping season, as well as upbeat earnings from other retailers.
Moreover, e-commerce growth slowed considerably, from more than 90% in October. That may be partly due to the fact that people are retuning to stores: Traffic was up 5.7% in total and 8.4% in the U.S. In addition, costumers spent 7.2% more per trip—although that rate of increase is also down on a sequential basis, and the lowest since March.
Costco’s November was leagues ahead of its pre-pandemic levels. But because investors have gotten used to blockbuster monthly updates, and with the stock notching record intraday highs this week, there was little room for disappointment. The shares ae up 30.5% year to date.
It’s inevitable that Costco and other retailers will eventually see some drop-off from their big pandemic-related gains. The question is how far and how quickly. So far Costco has done well at retaining the business it has seen this year, so the November report may not weigh on shares for long, especially if it can show that consumers are doing more holiday shopping at its stores when it reports December sales.
Write to Teresa Rivas at [email protected]