Thursday marked a dark day for the share prices of Costco Wholesale. The Thursday stock market trading session was not a good sight for Costco investors as they watched its shares plummet 6.4%.
The major pullback recorded in the share prices for the bulk-discount retailer was due to the weaker performance in the month of November.
Low Sales in November
The bulk discount retailer has reported that they have not generated enough sales in the month of November. In the four weeks, they had expected that their sales would be higher.
However, the sales they generated were weaker than the estimations they had set for the month of November.
The majority of the analysts had expected that Costco would witness a significant rise in its sales throughout November.
As the month of November was also going to bring in Black Friday, it could see a great pump in sales for the retail giant. Unfortunately, the month of November has proven to be nothing more than a disappointment.
The analysts had also hoped that the last month of 2022 would also be great for Costco’s business as it would help bring in huge sales.
Even Costco executives were of the view that sales would rise in the last couple of months of 2022. Given the performance in November, they do not have high hopes for the month of December.
Sales Reported by Costco
Costco has reported that in the month of November, they generated sales worth $19.17 billion. Compared to the same month in 2021, they have generated 5.7% more sales.
The particular month also included Black Friday but still, Costco was not able to hit the target. Despite the year-over-year rise, the month-over-month rise in sales was lower than expected.
The month of October recorded a 7.7% month-over-month rise in sales. The previous month was even better, recording a 10.1% month-over-month surge.
Costco also reported that they have recorded a 6.4% rise in the 13-week period for same-store sales. On the other hand, they recorded an 8.8% surge in US comp sales.
As for the four-week period, the same segments recorded surges of 4.3% and 6%.
Prediction by Target CEO
Brian Cornell, the CEO of Target had already made a prediction about the sales expected for the past couple of months in 2022.
As per Cornell, the situation has changed quite a lot in recent years. People’s behavior has changed tremendously due to ongoing economic issues and market downtrends.
This is the right time to witness that change in the behavior of the customers and see what their preferences are.
He added that their company had already started recording a change in the behavior of the consumers by the end of October.
He stated that they have witnessed that the people are not going all out on their expenditures. They are spending their money very carefully and they are not overspending, even if there are many discounts.
People have started looking for value when they buy products and goods. Therefore, retail companies have to recognize that at the earliest, understand the customers’ behavior, and work on strategies.
They have to make their offerings more attractive to the consumers so the masses can be attracted. For people, the major concern is now the tight budgets so they will plan according to that.
Gas Prices have Hit Costco’s Business
According to the executives at Costco, their business has taken a major hit in recent months due to declining gas prices. The gas prices in the US have been declining at a very fast rate.
Ultimately, it has hurt the sales of Costco and they are still hovering in the lower zone. In August, Costco sales were very high because the gas prices in the US had hit an all-time high of $5.10 per gallon.
