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Costco: America's favorite shop that everyone forgets



By Paul R. La Monica

NEW YORK (CNNMoney) – Amazon and Walmart Are Leader in Retail. But even though they are in an epic battle for the hearts, minds and purses of American consumers and investors, another company in the backyard of Amazon is doing well.

Stocks of Costco, the storage giant in Issaquah, Washington – only 17 miles away on I-90 from Amazon Seattle Headquarters – are up 12% in 2018 and more than 30% last year. They are not far from an all-time high.

It's sometimes easy to forget how big and successful Costco is, as Wall Street is so focused on the binary Amazon Walmart narrative.

But the sale of giant bottles of ketchup, jumbo packaging with paper towels, and other large quantities of household supplies is good business for Costco.

In the last quarter alone, the company achieved sales of $ 31

.6 billion. Same-store sales increased 10.2% yoy, while online sales grew nearly 37%.

And the momentum continues. Costco reported earlier this month that sales in the same business increased 11% in May.

Costco's sales have grown faster than its two biggest rivals – the Walmart-owned Sam's Club and BJ's Wholesale, which was released Thursday for the second time, rising nearly 30%.

Sam's club is struggling a bit. It used to shut 63 shops this year. Costco Chief Financial Officer Richard Galanti said in late May during the company's recent earnings conference that the company was able to gain some new members.

And according to Thinknum, a company that provides data from the Internet In social media, Costco mentions the tip of Sam's Club.

"Last month, Costco has experienced rapid growth in terms of Facebook members over the brand, while Sam's club lags behind," said Thinknum reporter Joshua Fruhlinger in a blog post earlier in the week

Fruhlinger added That many Facebook users have reported on the "who's here" field of the social network through Costco as Sam's Club – another sign that Costco is growing with younger customers

The Costco "Were Here" Count has overtaken that of Sam's Club for most of a year, with no signs of slowing or reversing, Frühlinger noted.

Costco's strength has even caught the attention of legendary investor Warren Buffett. Buffett's Berkshire Hathaway is a big investor in Costco.

Buffett told CNBC last month that he likes Costco because it has a "moat" – d. H. A very strong competitive position that makes it difficult for competitors to gain ground.

The company also increased annual membership fees without losing loyal customers.

Costco raised its fees in the United States last year for the first time since 2011, raised the executive plan from $ 110 to $ 120 a year, and increased the cost of its annual Goldstar membership from $ 55 to $ 60.

Galanti told analysts that Costco's membership renewal rate in the US and Canada was 90.1% last quarter, about the same as a year ago. He added that membership fee revenue increased nearly 15% in the quarter.

In this respect, Costco is very similar to its neighbor in the Pacific Northwest. Amazon generates a lot of money from its Prime membership subscriptions. And Costco lets the buyers pay before they even enter a store to buy anything.

It's no wonder that Costco is one of the most powerful retail stocks out there … just like Amazon.

TM & © 2018 Cable News Network, Inc., a Time Warner Company. All rights reserved.


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