Costco posted a 13% jump in September sales to $30 billion, but strip out gas and currency, and comparable sales grew a more modest 7.6%.
TIKR reporting on Costco Wholesale’s latest release shows September net sales of $30.02 billion, up 13.0% from $26.58 billion a year earlier.
Comparable sales rose 11.4% as reported. Exclude gasoline prices and currency swings, and the gain drops to 7.6%. That gap is the story behind the headline.
Gas and foreign exchange added about 3.8 points to total company comps. In the U.S., reported comps hit 12.5%, or 8% without gas and FX, a lift of roughly 4.5 points from those two factors alone.
Truist estimated Costco’s gasoline sales rose in the mid-40% range. Warehouse clubs that pump fuel, Costco, BJ’s Wholesale, and Walmart’s Sam’s Club, see reported sales swing hard when pump prices move.
Costco also pointed to Labor Day timing. The holiday fell a week later this year and added a little more than 50 basis points to the comparison, the company said.
Even after those adjustments, September still beat August. Truist noted the 7.6% adjusted comps topped August’s 5.4%.
Digitally enabled sales rose 19.0% over the five weeks ended October 4, another sign members kept ordering outside the warehouse floor.
"My view is that the demand is real, Strip out gas, currency and the calendar, and Costco still grew comps at roughly 7%, about two-thirds of the headline 11.4%."
That is how TIKR’s Gian Estrada framed the report after walking through the same adjustments.
Fiscal fourth-quarter gross margin, for the period ended August 30, came in at 12.55%, down from 12.91% a year earlier, per the TIKR series cited in the report.
Costco said gross margin increased 20 basis points once gasoline price inflation was excluded. Higher gas prices can pad sales dollars while compressing the reported margin rate.
"Gasoline inflation diluted the reported gross margin percentage, even as gas-adjusted margins improved."
Estrada put the tension in one line. The sales mix got noisier. The underlying merchandise margin did not collapse.
Costco stock closed at $942 on October 7, the day the September sales figures came out. The shares traded at 41.35 times forward normalized earnings, a hair under the five-year average next-twelve-months P/E of 42.78x, and well below a prior peak of 58.17x.
The Street mean price target sat at $1,058, about 12% above that close. The ratings mix showed 20 Buys, 4 Outperforms, 13 Holds, 1 Underperform, and 1 Sell.
Truist reiterated a Hold on October 8. The firm pointed to valuation and slower membership growth, even after the adjusted comps beat the prior month.
"At 41x, below its 42.78x average, the stock asks for steady growth, and September's adjusted comp came in at 7.6%."
That is the bargain investors are still being asked to accept: pay a premium multiple and receive steady club traffic, not a bargain-bin multiple on a turnaround story.
Costco’s model sits in a grocery and general-merchandise arena where traditional chains have chased bulk for years to keep pace with discounters and supercenters. The New York Post reported Kroger’s $20 billion bid for Albertsons, plus assumption of $4.7 billion in debt, as a push for roughly 13% market share after divestitures and a clearer shot at competing with Walmart and other large players.
Warehouse clubs answer that pressure differently, membership fees, limited SKUs, and fuel in the parking lot. September’s report shows how much the fuel line can still move the top-line print when prices run hot.
None of that erases the adjusted number. Take out gas, currency, and a friendly holiday calendar, and Costco still grew comps near 7%. Members spent. Digital orders rose. Merchandise margin held up once fuel inflation was stripped away.
Analysts can argue about the multiple. Truist already has. The sales tape, cleaned up, still shows a business earning its keep the old-fashioned way: customers walking in, swiping a membership card, and filling the cart.
Inflation can juice a fuel-heavy sales line for a month. It cannot invent repeat traffic or a 19% digital jump. Shoppers voting with their wallets remain the cleanest signal in retail, and September said they kept voting for Costco.