Tomahawk, WI 09/16/2014 (Basicsmedia) – Costco Wholesale Corporation (NASDAQ:COST) is slowly turning out to be a dominant force in the retail business, at the back of selling products at heavily discounted prices. During an interview on CNBC, Citigroup retail analyst, Oliver Chen, emphasized that Costco is benefiting a great deal from its pricing practices.
Costco’s wide pipeline of products enables it offer one of a kind upscale shopping experience for customers at relatively affordable prices. The retail store also enjoys one of the best membership renewal rate in the retail space.
Costco has enjoyed an impressive run in the market recording 19 consecutive quarters of positive comps with traffic in its store on an increase of 5%. This is good news for Costco Wholesale Corporation (NASDAQ:COST) considering Walmart and Target are currently recording negative traffic to their stores
“Costco Wholesale Corporation (NASDAQ:COST) is the biggest importer of European fine wines. It’s famous for 112k thousand worth of carats of diamonds, and the markup is very low, and they have low employee turnover. So you get luxury products, high service at a low price because the markup price at Costco, which is a different trading point of the business model is about 15%,” said Mr. Chen.
Gregg Greenberg of Thestreet.com, on the other hand, believes that stock valuation is the only exciting thing about the company. Costco Wholesale Corporation (NASDAQ:COST) is currently trading at 24-times next year earnings compared to Wal-Mart Stores, Inc. (NYSE:WMT)’s 13 times.
“[…] This things don’t last. You used to have people running at Manhattan to go to Target Corporation (NYSE:TGT); it doesn’t last that stock was enough to make I think it was Bill Ackerman cry at one point. So you just can’t trust hip-retail fads like this,” said Mr. Greenberg.
Costco Wholesale Corporation (NASDAQ:COST) is benefiting a great deal in the market according to Chen on the fact that it is not a high-end fashion retailer but a treasure hunt store for nice luxury goods.
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