Costco (COST) reported its November results. The retailer has the odd habit of issuing monthly numbers at 3 a.m. Maybe it hopes that it will get ahead of the other financial news for the day.
Costco also announced its revenue for its fiscal quarter ending November 22. Net sales for the first quarter of fiscal 2010 increased 6% to $16.92 billion from $16.04 billion. Same-store sales were up 3%, but that is only because of strength at the firm’s overseas operations where the figure rose 13%.
The market had almost no reaction to the Costco numbers, and its share price was flat as the market opened.
Costco is a hard company to place among the largest retailers. It offers sharp discounts on most of its items, but its shoppers are more upscale than Wal-Mart’s (WMT). Analysts are left wondering if reasonable results from Costco are reflective of the broader retail environment or a by-product of people with reasonable discretionary spending coming back into the market as the economy improves.
Most of the stocks of the large retail companies trade near 52-week highs. Costco shares change hands at $58.60, just below its annual top of $61.25. Target (TGT) and Wal-Mart are also near the high ends of their trading ranges. The danger of investing in these companies now is that the holiday season may disappoint Wall Street. Early indications are that brick-and-mortar retail sales are running flat with 2008, but 2008 was one of the worst holiday retail seasons in decades.
The largest difference in retail results for the calendar fourth quarter of 2009 may be e-commerce activity. Research from comScore and several other firms that measure online sales show that revenue in that part of the retail sector is up 4% to 5%. That should benefit retailers including Wal-Mart, Target and Best Buy (BBY), which have heavy traffic to their online stores. Costco’s e-commerce business is much smaller, which could undermine its figures for November and December.
The reason that the market may be ignoring Costco’s numbers is that they do not show how the company did on the Thanksgiving weekend or in early December. Those are the only figures that investors really care about.