Costco June sales rise 10.6% as stock falls 4% on slowing comps

Costco Wholesale Corp. reported June net sales of $29.24 billion, up 10.6% from a year earlier, as comparable sales growth moderated.

"Costco's in a funk," Jim Cramer said Thursday on CNBC, noting the retailer is navigating a tough consumer environment.

Total comparable sales rose 8.8%, with U.S. comps up 10.6%. Excluding gasoline and currency effects, total comparable sales increased 7%, cooling from 8% in May and below Mizuho analysts' expectations of 8% to 9% for the U.S. Digitally enabled comparable sales jumped 21.5% on an adjusted basis.

The stock fell more than 4% to around $913, trimming its year-to-date gain to about 5.5% — trailing the S&P 500's nearly 10% advance. Costco trades at 41 times forward earnings, a premium that leaves little room for disappointment, Mizuho said.

U.S. traffic rose 3.2% in June, about 50 basis points slower than the prior month. Average ticket growth, excluding gasoline, foreign exchange and inflation, eased to 3.7% from 4% in May. Non-food comparable sales were positive in the mid- to high-single digits, with jewelry, home furnishings and major appliances among the better-performing categories. Food and sundries comps rose in the low- to mid-single digits.

Costco's ancillary businesses, including gasoline and pharmacy, were sources of strength. E-commerce benefited from the company's online Membership Appreciation Days event held June 22-26.

Membership renewal rates held steady at 89.7%, while paid memberships grew 4.1% year over year to 82.9 million. The company's board declared a quarterly dividend of $1.47 per share, payable Aug. 7.

The deceleration reinforces the challenge facing even the strongest retail operators as consumers grow more cautious. Costco will report July sales on Aug. 5 and release fiscal fourth-quarter earnings on Sept. 24.

This article is for informational purposes only and does not constitute investment advice.