Amazon Isn’t The Only Company With A Rock Star Fan Base

rollandthomas (74)in #money • 6 years ago

This past week, Costco’s stock reached all-time new highs after announcing their same store sales for June (year-over-year).

Costco Wholesale Corp. continued its streak of robust revenue gains in June, including its third straight month of double-digit increases in U.S. comparable-store sales.

For the five weeks ended July 8, Costco totaled sales of $13.55 billion, up 11.7% from $12.13 billion a year earlier.

Club traffic and basket size also edged up in June, according to Sherwood. On a comparable basis, Costco’s store traffic during the month increased 4.4% worldwide and 4.6% in the U.S.

Source

Among the 29 analysts covering Costco, 20 analysts have a “buy” rating and nine analysts have a “hold.” Analysts expect Costco to end fiscal 2018 (ending in August) with strong sales and the EPS growth rate.

So what or who is driving these all-time high stock prices and year over year growth…it’s their Rock Star Fan Base called the Costcodians (I just made that up, what do you think about the name?). The Costcodians are so fanatic, one customer created a website called AddictedtoCostco.com

About 80% of Costco’s gross margin and 70% of its operating income come from its membership fees and roughly 90% of their members are renewing their annual membership. We are talking memberships representing 50 million households and 92 million cardholders.

Customers usually make up their membership fees by month nine due to all the savings. Costco’s prices are on average 30% lower than the larger supermarket chains. Costco uses their economy of scales to negotiate the lowest prices possible, then pass those savings to the customer.

Oh, did I mention all the food samples that are given out on a daily basis. You can go their for lunch and get full on all the food samples. But if you are still hunger, stop by the food court. The food court includes, but isn’t limited to their classic deal of $1.50 for the hot dog and a soda and if you don’t drink soda, grab a bottle of water for $0.25. The hot dog is so popular, it has its own website https://www.costcohotdog.com

Speaking of food, although Amazon is eating everyone else for lunch, I don’t expect Costco to be Amazon’s next meal because of the Costcodians.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.
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