The Costco Wholesale club supermarket chain started the third quarter well

In early March, retailer Costco Wholesale Corp. (COST) reported the results of the second quarter of the fiscal year better than analysts’ expectations. The new, third quarter, the company also started well, which was an occasion to improve the outlook for the shares in the first four weeks of the third quarter, Costco Wholesale reported sales growth of over 10% year-on-year.

For comparison, in the second quarter, Costco recorded an increase in comparable sales by 11% year-on-year, and the growth in total revenue was almost 16%. Earnings per share for the quarter rose from $2.14 to $2.92. Despite the existing uncertainty in the global economy, the company continues to maintain high growth rates.

In March 2022, several analysts improved their forecasts for Costco Wholesale shares at once. For example, analysts at Telsey Advisory Group, Evercore ISI and BMO Capital Markets set an “above market” recommendation for the company’s shares and raised the target price to $615, $565 and $580, respectively. In conditions of high inflation, Costco Wholesale is ready to increase its market share.

The membership model offered by the retailer helps to “bind” its customers, and the company’s customer base has a higher income than customers of other retail chains. E-commerce is an important growth factor. Costco Wholesale invests a lot in this segment, which is growing rapidly during the particularly acute phases of the pandemic, but remains strong even in the conditions of economic recovery.

For example, in the second quarter, the retailer’s online sales increased by over 12%. The company has upgraded logistics for the online trading program, so delivery has become faster and cheaper, and the profitability of the segment has improved.