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Costco Wholesale Stock Gains On Impressive September Sales Update

Costco shares moved higher Thursday after the bulk discount retailer posted an impressive set of September sales figures.

Costco Wholesale  (COST) - Get Costco Wholesale Corporation Report shares bumped higher Thursday after it posted a massive September sales boost that bodes well for the bulk discount retailer's holiday season momentum.

Costco' said sales over the month of September, the first month of its fiscal first quarter, rose 15.8% from last year to $19.5 billion. Total comparable sales were up 14.3%, Costco said, with core U.S. comps up 10%.

"Food trends picked up meaningfully in September vs. August, which we suspect is also being helped by strong in-stocks and potentially supply challenges in the restaurant space," said Oppenheimer analyst Rupesh Parikh, who carries an 'outperform' rating with a $500 price target on the stock. "Costco continues to capitalize on strong food at home consumption trends, inflation tailwinds, and an ongoing robust consumer spending backdrop for more discretionary purchases."

Costco shares were marked 2.1% higher in early trading Thursday to change hands at $455.68 each, a move that would extend their year-to-date gain to around 22%.

Late last month, Costco topped Wall Street forecasts for its fourth quarter earnings but noted it would begin limiting purchases of certain items owing to supply chain issues.

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Costco's August quarter sales rose 17% from last year to a Street-beating $62.68 billion while earnings rose 23.7% to $3.76 per share.

Looking into the final months of the calendar year, however, Costco said it needs to plan for product delays linked to both COVID and supply-chain disruptions that are adding to delivery times, as well as the global shortage in semiconductors.

Costco's larger rival, Walmart  (WMT) - Get Walmart Inc. Report, is also making arrangements to mitigate supply chain disruptions by installing a new COO for its U.S. business heading into the holiday season.

Chris Nicholas, a senior finance executive who has worked for U.K. grocery store giant Tesco plc, has replaced Dacona Smith as U.S. COO, Bloomberg News reported late Tuesday, citing a company memo.

The change come as the world's biggest retailer begins its final holiday season push amid perhaps the most disrupted supply chains in decades, with shortages and delays expected to hit imports and boost prices.

Recent data suggests the base price of shipping a standard 40-foot-equivlaent container from Shanghai to New York has risen five-fold from pre-pandemic levels to $15,000, causing supply shortages from everything from clothing to shoes to furniture and household appliances.

The average waiting time for shipping vessels outside the port of Los Angeles is now around 8 days, with a backlog of 54 ships outside of Long Beach.