Today, March 2011 retail comps were reported. We found the Costco comp data reported today to be solid. Costco's stock is up today as the company reported better than expected comps (same store sales for stores open at least one year) for March 2011 despite a difficult y/y comparison due to a positive March 2010 comp and the effect of the 2011 Easter calendar shift. For Costco, March is the latest in a recent string of better than expected monthly comp results.
Total Costco comps for March 2011 were 8% (adjusted for currency and gasoline effect) and 13% on a gross unadjusted basis. The 8% comp was better than the 7.4% comp expected by Wall Street.
Costco's comps have sharply rebounded since their late 2008 to July 2009 recession period lows. During the back half of 2010 through March 2011 Costco's comp's accelerated despite difficult y/y comparisons.
Our monthly Costco comps tracker which includes total y/y comp data and y/y comp data adjusted for currency and gasoline impacts. When looking at the numbers, please be aware that the recent string of positive monthly comps is on top of prior years numbers that were positive, which makes for pretty impressive recent numbers. It should also be noted that International trends remain strong.
Looking ahead into the summer of 2011, all eyes will remain on the potential negative impact of high gas prices and food inflation for retailers. Our best sense is that Costco may benefit from additional increases in gas prices due to positive inventory effects. As for food, we expect Costco to be less affected than other retailers and consumer related companies due to the more non-discretionary nature of their business and ability to maintain their margin strategy vis-a-vis other consumer related companies.
If high gasoline and food prices persist, we expect discretionary consumer related companies to be more negatively affected than Costco. For the retail industry as a whole, today's comp report was better than expected.