Costco (NASDAQ:COST) continued to strengthen its market position in July, posting impressive sales and traffic growth despite a challenging retail environment.
According to analysts from UBS and Telsey Advisory Group in separate notes Thursday, Costco's ability to consistently outperform its peers underscores its best-in-class execution and resilient business model.
Analysts highlighted that Costco's July sales results demonstrated the warehouse club's ongoing market share gains, driven primarily by robust traffic growth.
"In July, the company generated a core comp of 7.2% worldwide," analysts noted, pointing out that this was an improvement over June's 6.9% and May's 6.5%.
The report emphasized that Costco's performance was particularly notable in its Non-Foods category, which saw a low double-digit increase, even as other retailers struggled with declines in similar discretionary categories.
Traffic was a key driver of Costco's success, with analysts reporting a 6.3% increase globally and a 5.1% rise in the U.S. This strong traffic trend was further bolstered by solid e-commerce growth, with online sales up 21.1% year-over-year in July.
"This marks the ninth consecutive month where COST's discretionary categories comped positively, indicative of the company's market share gains amidst a challenging industry backdrop, in our view," wrote analysts.
Analysts echoed these sentiments, praising Costco for its "solid July headline comp of 5.2%," which surpassed their forecast of 3.2%.
They also noted that excluding the impact of gas prices and foreign exchange, Costco's core merchandise comp was an impressive 7.2%.
Analysts highlighted the strong performance of Costco's e-commerce segment, which benefited from a recovery in Non-Foods and effective marketing strategies.