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alstry (< 20)

Costco Real Same Store Sales Negative



September 03, 2008 – Comments (2)

Costco reported that its domestic same store sales was up 9%.  Adjusting for a 40% increase in gas prices, the company reported sales were up only 6%.

As an aside, I am an avid Costco fan.  I think Costco is the best retailer in the world with a fantastic group of buyers.  That said, go visit a Costco and for $1.50 you can get a great dog and a Coke at the end of the cashiers. I suggest load it up with onions and spicy mustard.

Go buy one and just sit there and watch the people go buy with carts.  Last year the carts were a mix of stuff and food.  This year, I have noticed that practically every cart is food only.  It appears Costco is becoming more of a grocery store versus general merchandise.  You can also see this in the increased allocation of floor space to groceries.

That said, we know that food prices have skyrocketed in the past six months. With a higher percentage of revenues coming from food, is there little doubt that adjusting same store sales in the same way the company did for gas, sales would have been negative.

When Costco's inflation adjusted same store sales are know we have serious problems.

As revenues continue to contract debt will continue to default.  Since debt is by far and away the largest asset class in America, and equity is simply any value above debt.......anyone think we are about to fall off a cliff?


2 Comments – Post Your Own

#1) On September 03, 2008 at 7:25 AM, alstry (< 20) wrote:

The shutdown of America continues..............

NEW YORK (MarketWatch) -- Johnson Controls Inc.  said Wednesday that it will cut workers and close plants to cut costs. This restructuring is expected to result in a fourth-quarter pre-tax charge of $450 million to $500 million and be done by early 2010. This comes as a result of slow European and North American auto markets and the movement of vehicle production to low-cost countries.

More jobs gone and less personal income taxes paid in America?

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#2) On September 03, 2008 at 10:10 AM, TDRH (97.09) wrote:

Guess the stimulus went into the gas tank.

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