Jim Cramer: 'Costco's in a funk' but still a good name in a bad neighborhood
Monthly sales growth at Costco slowed in June — a sign that even one of retail's strongest operators isn't immune to the economic realities that have consumers rattled. Costco reported late Wednesday that total June...
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An important development from the financial markets: Monthly sales growth at Costco slowed in June — a sign that even one of retail's strongest operators isn't immune to the economic realities that have consumers rattled. Costco reported late Wednesday that total June sales rose 10. 6% year over year to $29.
4 billion, coming in slightly below expectations. Drilling down on June comparables in the U. , excluding gasoline, sales increased 7.
Economic Details
7% gain in May, and modestly below Mizuho analysts' expectations of 8% to 9%. All categories slowed slightly last month. Shares of the membership-only retailer fell more than 4% on Thursday.
While the stock is still up about 5. 5% year-to-date, that performance trails the S & P 500 's nearly 10% gain. "Costco's in a funk," Jim Cramer said Thursday on CNBC, noting the company is doing business in a tough economic climate.
Still, portfolio director Jeff Marks signaled the importance of diversification. "They're doing well, but was it as good as May? No, and that's why the stock is down," Jeff said during Thursday's Morning Meeting for Club members.
Analyst Views
"This is a very defensive name that can still put up strong comps even when the economy is good or bad," he added. For his part, Jim said he would be interested in buying Costco stock if it broke below $900 per share. The stock was trading around $913 in afternoon trading.
Put simply, Jim thinks Costco is a good name in a bad neighborhood, pointing to the tepid gains in the retail sector overall. The popular S & P Retail ETF (XRT) is only up 1. That underperformance was reflected in KeyBanc Capital Markets' latest consumer survey, which was conducted late last month and published Monday.
During the March to June quarter, spending intentions and financial confidence both weakened, KeyBanc found, as consumers remain worried about high food costs, their own personal income, and elevated gas prices. Those concerns align with the latest consumer sentiment surveys and Costco's June traffic and ticket trends. Domestic traffic rose 3.
Economists are analysing what the news means for the markets.
