Telsey Advisory Group’s Outlook on Costco Ahead of December Sales
Telsey Advisory Group has reaffirmed its Outperform rating on Costco Wholesale (NASDAQ: COST) with a price target of $1,100, as investors eagerly await the company’s upcoming December sales report, scheduled for release after market close on Wednesday, January 7. This report is critical for stakeholders as it offers an insight into Costco’s performance during the holiday season, a key period for retail sales.
Comparative Sales Growth Forecast
In their latest analysis, Telsey has projected a total comparable sales growth of 2.2% for December 2025, a significant decrease compared to 7.4% in the previous year. This decline can be attributed to several factors, including changing consumer behaviors and external economic pressures. Excluding an estimated net benefit of approximately 20 basis points from gasoline prices and foreign exchange fluctuations, Telsey anticipates core merchandise comparable sales growth of 2.0%, a stark contrast to the 9.9% growth recorded a year earlier.
Regional Performance Insights
Breaking down the sales performance by region, Telsey expects U.S. comparable sales excluding gas to rise by 1.0%, down from 9.8% last year. Meanwhile, comparable sales in Canada are projected to be 4.0% excluding gas and foreign exchange, compared to 10.3% in the same period last year. Other international markets are anticipated to see comparable sales of 5.0% excluding foreign exchange, a decrease from 9.8% in the prior year. This regional analysis underscores the varying impacts of economic conditions on Costco’s sales across different markets.
Impact of Gas Prices and Currency Trends
Gasoline prices are expected to have a modest impact on Costco’s sales, declining in the low single-digit range during December. This trend is projected to create a headwind of roughly 20 basis points to comparable sales. However, a weaker U.S. dollar is likely to provide an estimated 40 basis points tailwind, offering some relief to the overall sales performance based on the latest currency trends.
Traffic and Average Ticket Growth
Telsey also forecasts a traffic growth of 0.5%, significantly lower than the 5.5% growth observed last year. This slowdown reflects consumers’ continued search for value amid a challenging economic environment. On the other hand, average ticket growth is expected to remain steady at 1.7%, consistent with the previous year. This stability is attributed to ongoing tariff-related inflation and positive category trends that encourage consumers to make bulk purchases, which is a hallmark of the Costco shopping experience.
Digital Sales Performance
In a digital-first world, Telsey anticipates that Costco’s digital sales will increase by 5.0%, a notable decline from the 34.4% growth experienced last year. This decrease may reflect the challenges of sustaining rapid digital growth as competition intensifies. However, gains in non-food categories, ongoing benefits from assortment expansion—including offerings from CostcoNext.com—and targeted marketing around key events are expected to bolster digital sales during the holiday season.
Category Trends and Consumer Behavior
The category trends are expected to align predominantly with the company’s averages, with non-food sales benefiting from holiday and gift-driven demand. Food & Sundries and Fresh Foods are likely to remain solid due to ongoing at-home consumption trends, alongside Costco’s value-focused assortment. As consumers continue to prioritize value and bulk purchasing, Costco’s strategic positioning is expected to provide a competitive advantage, especially during the holiday shopping season.
Conclusion
As Costco prepares to release its December sales report, the insights provided by Telsey Advisory Group highlight both the challenges and opportunities facing the retail giant. While comparable sales growth may be slower than in previous years, Costco’s focus on value and its robust digital strategy may help navigate a complex retail landscape. Investors and stakeholders will be keenly observing the upcoming report, not only for the figures but also for what they indicate about consumer confidence and spending habits in the current economic climate.
