As soon as the consumer realized they were getting 1200 Trump Dollars they ran out to Costco and stocked up. The shelter in place order required all sorts of provisions, foods, and supplies. The American worker took a portion of the money they know they are getting and dug into any savings and budgeted 40% for food and other supplies. Costco benefitted with a solid quarter.
The fragile economy teeters on the handout from Uncle Sam as most small businesses are bankrupt unless the economy restarts in Q2. Imagine if you own a McDonalds, or a Jimmy Johns fast-food franchise, and are sitting at home cleaning your attic wondering if your long ownership and hard work will be gone in the future. The economy is fragile, and Uncle Sam can only bailout for a short period – everyone knows this.
COST shares have meaningfully outperformed year-to-date, up 4% vs. a 15% decline in the S&P 500. Warehouse supermarket chain Costco (COST) has reported net sales of $15.49 billion for the retail month of March, an increase of 11.7% from $13.87 billion last year. Comparable sales trends in the US also remained strong with a 12.1% US comp increase for the month of March.
Similar to other retailers, COST is also seeing surging consumer demand online with e-commerce sales accelerating by 49.8% in March.
“We believe this reflects a pull forward in demand, restrictions in stores impeding customer traffic, shoppers browsing less in discretionary areas, and the shutdown of select services” writes Oppenheimer’s Rupesh Parikh. ” The analyst reiterated his COST buy rating on April 8 with a $335 price target “