Costco Wholesale's (COST) core comparable sales saw steady growth momentum in April, driven by continued market share gains, particularly in discretionary categories, UBS Securities said in a note emailed Thursday.
Non-food categories posted mid-to-high single-digit growth, driven by areas such as jewelry, major appliances, and home furnishings, according to the note.
"The comp was yet again largely driven by traffic, which was up 4.2% on a worldwide basis and 5% in the US," the firm said. This steady footfall should support sales and enable better expense leverage, helping Costco maintain strong margins.
Improvements in digital capabilities, such as faster delivery, expanded stock-keeping units and mobile app enhancements, resulted in a 13% year-over-year growth in e-commerce sales in April, UBS added.
The firm has a buy rating on Costco's stock with a $1,205 price target.
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