- Costco is expected to gain sales and market share as US shoppers stock up on essentials in anticipation of a wider coronavirus outbreak, according to UBS.
- Costco “is one of the better positioned retailers to weather any impact from COVID-19,” the disease caused by coronavirus, and should manage through supply chain disruptions “better than most,” according to UBS analyst Michael Lasser.
- “As consumers prioritize a dwindling number of trips to stores, Costco will likely be at the top of the list,” Lasser wrote in a research note.
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Across the US and globally, some companies are shuttering corporate offices and stores, canceling events, and lowering revenue guidance in response to the growing coronavirus outbreak.
Meanwhile, the bulk retailer Costco is having what could be one of its best weeks in years.
Photos in recent days show chaotic scenes at Costco stores across US as teems of shoppers crowd its aisles and clean out the stores’ inventory ahead of a potentially wider outbreak of the novel virus.
It’s possible that this wave of panic-buying will lead to only a temporary sales bump.
Regardless of how long the surge in demand lasts, Costco will likely manage through the outbreak better than most retailers, according to a new research note from UBS analyst Michael Lasser.
“Looking ahead, we think Costco is one of the better positioned retailers to weather any impact from COVID-19,” Lasser wrote in the note. COVID-19 is the name of the disease caused by the novel coronavirus.
- Reuters/Duane Tanouye
“It’s likely to serve as a place of constant stock-up for members,” Lasser wrote. “As consumers prioritize a dwindling number of trips to stores, Costco will likely be at the top of the list. …Plus, its growing e-commerce business should also accelerate.”
These stock-up trips should boost Costco’s same-store sales, and help the company gain market share, Lasser wrote.
UBS is projecting a 9% increase in Costco’s US same-store sales in February, following January’s 6.9% rise in that metric.
“We believe Costco’s bulk offering positions it to be a relative share taker if the outbreak intensifies in the US,” Lasser said. “Even if its in store sales ultimately face some pressure, we believe Costco is well positioned to make up much of this on the back of its recent investments in omni-channel. This includes its nationwide home delivery for non-perishable items, as well as fresh grocery through third party providers like Instacart.”
But can the company keeps its stores stocked amid the surge in demand? Lasser thinks so.
“There are also questions about supply disruptions from China, but we believe it can manage through this better than most (a good portion of its sales are sourced outside of China),” he wrote.