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Costco Reports (1%) Comps During October; Retail Numbers to Weaken

Posted on | November 6, 2008 Time: 2:31 pm |

While Wal-Mart again sets the bar for steady comps performance this year with a 2.4% rise in same-store-sales, ex-fuel. Costco, meanwhile, reported a 1% drop versus expectations of 3.6%. But if we strip out the spiking U.S. dollar’s effect on the month, the company-wide comps growth at Costco rises to 3%, with 9% international growth.

As we get the results in for the rest of the retail group, these modest figures should continue to gain respect. October was a very black month, and is tracking to be the worst spending month in a decade (if not more…) Any rise in sales (Costco reported 1.7% total sales growth) during this month should be seen as a decisive vote by the consumer.

I’m looking for dreadful results from most retailers, in-line with my broader call to avoid consumer-focused stocks, especially consumer cyclicals like Macy’s, Marriott, and anything related to footwear, clothing, restaurants,and entertainment/leisure.

Costco shares are tracking 2% weaker in pre-market trading. It and low-key grocer Safeway (SWY) are the only consumer stocks in the Secular Trends Model Portfolio.

disclosure: author does not hold positions in the companies mentioned.

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