Costco's Sales Momentum Builds: What It Means for the Holiday Season

Core Insights - Costco Wholesale Corporation's net sales increased by 8.3% to $48.33 billion over the first nine weeks of fiscal 2026, indicating strong shopper engagement and a positive outlook for the holiday season [1][8] - Digital sales surged by 21.6%, showcasing Costco's effective adaptation to the e-commerce trend and its ability to maintain competitive pricing through bulk purchasing and an efficient supply chain [2][8] - The growth in sales appears organic, with stable underlying demand, despite previous year's sales being affected by external factors like Hurricane Helene [3] Sales Performance - Comparable sales in the United States rose by 6.6%, while Canada and other international markets saw increases of 6.3% and 7.2%, respectively [1][8] - October's sales performance showed an 8.6% increase, driven by solid total comparable sales gains [1] Consumer Behavior - As the quarter progresses, focus will shift to basket sizes and category mix, with consumers prioritizing essentials and selectively choosing discretionary items [4] - The current sales data suggests a strong momentum as Costco enters the holiday season with a loyal customer base [4] Competitive Landscape - Costco's share price has declined by 1.1% over the past year, contrasting with the industry's growth of 3.4%, while Dollar General's shares have rallied by 30.1% and Target's shares have dropped by 40.5% [5] - Costco's forward 12-month price-to-earnings ratio is 45.43, significantly higher than the industry average of 29.83, indicating a premium valuation compared to competitors [6] Financial Estimates - The Zacks Consensus Estimate for Costco's current financial-year sales implies a year-over-year growth of 7.7%, while earnings per share are expected to grow by 11% [9] - Current quarter sales are estimated at $67.15 billion, with a year-over-year growth estimate of 8.04% [10]