Giant Retail Stock to Watch: Costco Wholesale Corporation (NASDAQ: COST)

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Costco Wholesale Corporation (NASDAQ: COST) stock rose over 1.5% on 28th September, 2020 (as of 1:14 pm GMT-4; Source: Google finance) driven by ongoing bullish momentum. The company in the fourth quarter of FY 20 has reported 12.5% rise in net sales to $52.28 billion from $46.45 billion last year. For the fourth quarter of fiscal 2020, comparable sales on a reported basis for the 16 weeks the U.S. was 11%, excluding gas deflation and FX the U.S. was 13.6%. Canada reported 9.1% up, again ex-gas deflation and FX 12.6% up. Other international has delivered 16.1%, ex-gas deflation in FX, 18.8%, which brought the total company to a reported number of 11.4% comp and again ex-gas deflation of FX up 14.1%. For the company, e-commerce reported was up 90.6% and ex-gas and FX – risk FX 91.3% up.

Moreover, the traffic or shopping frequency on a worldwide basis has fallen down 1.2% during the fourth quarter and posted an increase of 1.2% in the U.S. The average transaction or average basket size was up 12.7% during the fourth quarter. COST reported a fourth quarter membership fee income of $1.106 billion, up $56 million from $1.05 billion in the fourth quarter of ’19.

During the fourth quarter the company had opened eight net new units and 13 for the entire fiscal year. In terms of renewal rates, at fourth quarter end our U.S. and Canada renewal rate remained at 91.0% and worldwide rate also remained at its similar number from a quarter ago at 88.4%. The company reported gross margin came in at 11.24%, which is up 18 basis points from last year’s fourth quarter gross margin of 11.06%. The reported SG&A percentage year-over-year was lower or better by 47 basis points coming in at 9.62% of sales this year in the fourth quarter versus 10.09% last year in the fourth quarter.

Additionally, the company incurred the capital expenditures for the 16 week fourth quarter of approximately $852 million and for the full year the company spent $2.8 billion. The estimated CapEx for all of fiscal ’21 is to be in the $3 billion to $3.2 billion range.

Meanwhile, from a supply chain perspective, kind of 40,000 foot view, in terms of China, by the shipments to the company, most of the factories are up and running. There are still some production challenges driven by certain components downstream in the supply chain, in areas like electronics, computer and certain white goods. It is getting better and improving each week

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