Connecting the Dots Between Costco, Challenger Jobs Report

Sales numbers for Costco  (COST)  were revealed last night, and this morning the Challenger, Gray & Christmas Inc.'s job cuts report landed. 

Think there's no connection between the two? We would argue there is. The reason is simple: Folks who have been laid off tighten their belts and embrace ways to stretch their dollars. This could affect Costco, and TJX Companies  (TJX)  as well.

Let’s dig into these figures and add some context as we do it.

Costco’s January figures do it again

Costco reported comparable sales for January were up 7.1%, including a 5.8% increase in the U.S., an 11.4% rise in Canada, and a 9.5% gain for other international markets. E-commerce comparable sales shot up 34.4% for the month. But after stripping out the impact of foreign exchange and gas prices, comparable sales were up 6.4% during the month, including an increase of 6.8% in the U.S.

Not only do those adjusted total company comp sales and the ones for the U.S. tick higher compared to the 6.2% and 6.3% ones for December, but they also stand on top of impressive January 2025 numbers. In the year-ago period, Costco posted total adjusted comp sales of 9.8% with 9.2% in the U.S.

In our view, those figures leave little room to doubt Costco is taking consumer wallet share as inflation pressures and other uncertainties weigh on the consumer. Next week’s January retail sales report, as well as the upcoming wave of retailer earnings, will bring a few yardsticks by which we can measure not only Costco’s January performance but its November-January one as well. As a reminder, here are Costco’s total adjusted comp sales figures and those for the U.S. over the last reported three months:

November 2025 Total: +6.4%, US:- +5.8%

December 2025: +6.2%, +6.3%

January 2026: +6.4%, +6.8%

As we measure up those figures against others in the coming days, we’ll revisit our current $1,100 price target for COST shares as needed. Based on that outcome, we will do the same with our current One rating.

A Big Challenger Job Cuts Report, but….

Per the Challenger Job Cuts report, one we follow given the insight it brings to the jobs market, U.S. companies announced the largest number of job cuts for any January since the depths of the Great Recession in 2009. The total figure was 108,435 cuts, up 118% year over year and up considerably from the 35,553 cuts in December. To that, we can add the report’s findings that hiring intentions slid 13% from year-ago levels to 5,306 — marking the weakest total for any January in the firm’s records back to 2009.

Now for some context. Almost half of the job cuts announced in January were tied to Amazon  (AMZN) , UPS  (UPS) , and Dow  (DOW) . Recall that in the last few weeks, Amazon announced plans to cut 16,000 corporate positions in a restructuring move, while UPS said it would shed as many as 30,000. Dow intends to eliminate about 4,500 positions, while Peloton  (PTON)  and Nike  (NKE)  also announced workforce cuts.

Contrasting those two January figures from Challenger and mixing in the ones found in the January PMI reports from ISM earlier this week, it’s hard to argue with the slow-growth nature of the jobs market. But we discussed this was likely to be the case back in late December when we discussed a CEO gathering conducted by the Yale School of Management, reported by The Wall Street Journal:

At a gathering of CEOs in Midtown Manhattan this month, organized by the Yale School of Management, 66% of leaders surveyed said they planned to either fire workers or maintain the size of their existing teams next year. Only a third indicated they planned to hire.

“You’re going to see a lot of wait and see,” said Chris Layden, chief executive of staffing company Kelly Services.

With prospects for slow hiring at least in the near-term, we’ll continue to follow layoffs, restructuring, and related announcements in the coming weeks. If we get more of them, it will reaffirm our view on COST and TJX shares discussed above, as well as the ones we have for Amazon’s retail business. 

Next up: Our report on Alphabet  (GOOGL) .

The Pro Portfolio is long GOOGL, AMZN, COST, TJX.