There is an upper tier of retail companies both in the US and abroad. It has been assumed that these firms would not dodge a recession, but that they might keep their sales flat with last year and pick up market share from weaker competitors.
Wal-Mart (WMT) is in that special class. So is Costco (COST)
Costco has made its reputation on delivering premium items to customers at extremely low prices. It stocks it own house brand for shoppers who want to be especially frugal. Over the years, this blend of quality and cost and kept the company’s sales growing faster than almost all of its competition.
The Costco record of beating the industry appears to have come to an end. According to MarketWatch, "Costco Wholesale Corp. expects to report fiscal second-quarter earnings `substantially below’ the current First Call consensus analyst estimate of 70 cents a share, and said it won’t provide earnings estimates for the rest of the fiscal year." Same-store sales in January fell 9% overseas and were flat in the US.
While many retailers have seen same-store sales down by double digits, the Costco results in it home market are sill relatively impressive. That may be cold comfort to shareholders.
Costco’s disclosure about its fortunes over the last month confirm what many analysts have feared. Consumers will not come out of their shells even to pursue exceptional value at low prices. The next victim of the trend is likely to be Wal-Mart. At that point the last man standing will be down. The effect of the recession on the retail industry will be complete.
Douglas A. McIntyre
The Average American Has No Idea How Much Money You Can Make Today (Sponsor)
The last few years made people forget how much banks and CD’s can pay. Meanwhile, interest rates have spiked and many can afford to pay you much more, but most are keeping yields low and hoping you won’t notice.
But there is good news. To win qualified customers, some accounts are paying almost 10x the national average! That’s an incredible way to keep your money safe and earn more at the same time. Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 3.80% with a Checking & Savings Account today Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Click here to see how much more you could be earning on your savings today. It takes just a few minutes to open an account to make your money work for you.
Our top pick for high yield savings accounts includes other benefits as well. You can earn up to 4.00% with a Checking & Savings Account from Sofi. Sign up and get up to $300 with direct deposit. No account fees. FDIC Insured.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Latest from 24/7
Our expert who first called NVIDIA in 2009 is predicting 2025 will see a historic AI breakthrough.
You can follow him investing $500,000 of his own money on our top AI stocks for free.