As Costco’s July Retail Sales Jump, We're Also Upbeat on Another Holding
Let's break down the membership warehouse company's latest monthly sales numbers and their implications for the retail space.
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We recently discussed the upswing in grocery prices, and why we saw Costco COST benefiting from that consumer pain point. That line of reasoning was confirmed last night with Costco’s July revenue report.
The report showed Costco's adjusted U.S. comp sales accelerated to 6.5% from 5.5% in June. Overall adjusted July sales for Costco rose 7.0% in July, up from 6.2% in the prior month. E-commerce sales for July also accelerated, increasing 14.9% compared to 11.2% in June.
While part of the sequential improvement is Costco related, we suspect at least some of it can be traced back to greater digital shopping in July surrounding Amazon’s AMZN Prime Day event and competing efforts by the likes of Walmart WMT, Target TGT, and others.
We’ll use the July Retail Sales report due on August 15 as a litmus test for Costco’s July revenue report, but we would be surprised if it didn’t point to the membership warehouse company winning consumer wallet share.
With signs that inflation pressures remain elevated, we continue to favor COST shares, especially as the full effect of last year’s membership price increase is yet to be felt. We continue to rate COST a One, and our price target remains $1,200.
Upbeat on TJX
Those same pressures also keep us upbeat on shares of TJX Companies TJX, which gapped up over the last few days. While pleased with that move, givem our $137 target, we would not chase the shares ahead of the company's August 20 reporting date. That report and the outlook for H2 2025 will determine our next move with TJX shares, which could very well be a price target revision.
At the time of publication, TheStreet Pro Portfolio was long COST, AMZN and TJX.
