MW From cellphones to gift cards, Costco is finding ways to boost monthly sales as shoppers face more 'trade-off decisions'

By Bill Peters

The warehouse retailer 'constantly finds new assortments to drive excitement,' UBS analysts say

A security guard organizes shopping carts outside the entrance of a Costco Wholesale store in Shenzhen, China on April 12. The warehouse-style American retailer has seen growing popularity in Chinese cities.

After years of big stock gains through the pandemic and the price increases that followed, Costco Wholesale Corp. has faced concerns about stalling momentum.

But UBS analysts say strong trends for July show those concerns are overblown, and called out Costco's ability to find new things each month - from cellphones to gift cards - to drive sales.

In a note on Wednesday following the company's monthly sales results, the UBS analysts, led by Michael Lasser, said a slowdown in May and June led some investors to conclude that Costco was running out of ways to accelerate sales. That line of thinking, he suggested, was too short term.

"Not all months have to be the same," Lasser said. "We think it's healthier to look at [Costco's] performance over a more extended period of time than by simply dissecting a month or two."

He noted that while Costco wasn't benefiting as much from its offerings of precious metals like gold bars, it had found ways to squeeze out gains elsewhere.

"This month, the standout was cellphones," Lasser said. "Last year, it had Southwest $(LUV)$ gift cards that helped its comps. This year, it's offsetting that tough comparison with DoorDash $(DASH)$ and Uber $(UBER)$ gift cards.

"This is the beauty of [Costco's] business model," he continued. "It constantly finds new assortments to drive excitement and create a 'buy now' mentality. We think this will remain a key ingredient of its success."

Costco has made those efforts amid signs of weakness in the U.S. job market and some signs that tariffs could be pushing prices up. Lasser said that retailers were about to enter a more pronounced period where shoppers will have to make "trade-off decisions" as price increases outpace wage growth in the months ahead. But he said that would likely benefit Costco and other big discounters.

"We think the impact of this could be even more evident in big-ticket categories, where price increases will be larger on a dollar basis," he wrote.

Lasser said that expanded hours were likely helping Costco, and any sales gains would likely counterbalance any extra costs from them. He added that more technology could "free up further capacity in its high-volume stores."

Oppenheimer analysts, in a separate note on Wednesday, were also upbeat on Costco. But they said increased U.S. club hours for the chain's "executive" members could be a "near-term profit headwind."

Shares of Costco $(COST)$ were up nearly 1% on Thursday. The stock is up 6.8% so far this year.

-Bill Peters

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August 07, 2025 14:12 ET (18:12 GMT)

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