Retail Risers: Grades Go Up for Costco, BJ's
NEW YORK (
) --
Costco Wholesale
(COST) - Get Report
is performing this season like one of those vaunted triple-threat options: delivering better-than-expected sales, upbeat comments from managements and a growing international store base. Thus, why William Blair says he is upgrading the company to outperform from market perform today.
In August,
Costco same-store sales declined 2%
, but that still managed to beat Wall Street's expectations of a 5.7% drop.
"With the step-up in sales during August and positive takeaways from our meeting last week with Richard Galanti (chief financial officer) and Bob Nelson (vice president of financial planning and investor relations), we are more confident that sales and earnings could meaningfully surpass Street expectations over the next year," analyst Mark Miller wrote in a client note.
International growth is also beefing up businesses, as recent store openings in Asia have been strong. The company expects to open up more clubs in the future.
Miller predicts that revenue continued to improve in September, but management did not provide guidance for the month.
Still, Costco isn't the only wholesaler favored by analysts. Last week UBS picked rival BJ's Wholesaler as one of their top picks among staple retailers.
"We believe this
BJ is an underappreciated story," UBS wrote in a note. "We believe BJ has solid prospects to post above industry average recurring EPS growth in the low double digits for
fiscal 2009 and fiscal 2010."
UBS attributes this growth to ongoing recovery from its 2007 restructuring and market share gains in its grocery segment.
According to UBS' consumer survey, 7.69% of respondents said they spend the most in BJ's in August out of any other club store, compared with 2.67% in July and 2.27% in April.
-- Reported by Jeanine Poggi in New York
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