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Kroger Lowers Full-Year Identical Sales Growth Outlook Following Fiscal Second-Quarter Revenue Miss
US Markets

Kroger Lowers Full-Year Identical Sales Growth Outlook Following Fiscal Second-Quarter Revenue Miss

Kroger (KR) lowered its full-year identical sales growth outlook on Friday as the metric decelerated year over year in the fiscal second quarter and missed market estimates, while the supermarket chain's revenue fell short of expectations.The company now anticipates identical sales, excluding fuel, to increase by 0.2% to 0.8% for fiscal 2026, including a headwind of about 140 basis points from the Inflation Reduction Act. Kroger previously projected the metric to grow 1% to 2%, while the current consensus on FactSet is for a gain of 1.3%.The Inflation Reduction Act is a US law passed in 2022 that included measures to lower prescription drug costs for Medicare patients."The update reflects our first half results, together with pressures that remain in the balance of year in the opening weeks of the third quarter," Chief Financial Officer David Kennerley said during a conference call, according to a FactSet transcript.Identical sales without fuel rose 0.2% in the quarter ended Aug. 15, down from 3.4% the year before and below the Street's view of 0.8%. Overall revenue advanced to $34.62 billion from $33.94 billion, but missed the average analyst estimate of $34.64 billion."The top line was soft across the industry this quarter," Chief Executive Greg Foran said on the call. "We know that fuel over $4 has an impact on consumer spend."US retail gasoline prices averaged $4.2950 per gallon on Friday, compared with $4.1474 a week ago and $4.0116 a month prior, according to AAA motor club data that tracks fuel prices in the US.In a client note emailed last week, Oppenheimer said it expected Kroger's second-quarter identical sales to underperform amid a challenging grocery business environment, likely prompting a full-year outlook revision.The supermarket chain continues to expect adjusted earnings to be in a range of $5.10 to $5.30 per share for the ongoing fiscal year, while the Street is looking for $5.20. In the second quarter, adjusted EPS climbed to $1.09 from $1.04, surpassing the market's view for $1.06, buoyed by cost savings, robust pharmacy and fuel performance and improving e-commerce profitability, Kennerley said in the earnings release.Kroger expects identical sales without fuel to be "slightly better" in the third quarter than in the subsequent three-month period, "despite a lower sales outlook," Kennerley said on the call. The company sees additional sales headwinds in the fourth quarter, with the impact from the Inflation Reduction Act projected to rise to about 150 basis points as new high-cost drugs are added to the formulary, the CFO noted.Last month, retail giant Walmart (WMT) reported fiscal second-quarter US comparable sales growth that decelerated more than Wall Street expected amid a pharmacy-related headwind. In July, grocery chain Albertsons (ACI) lowered its fiscal 2026 earnings and identical sales outlook.Warehouse chain Costco (COST) is scheduled to release its latest financial results on Sept. 24.Price: $57.80, Change: $+0.84, Percent Change: +1.48%

$ACI$COST$KR$WMT
Uneven Investor Sentiment Toward Hardline Retailers Could Persist Amid Macro Headwinds, UBS Says
US Markets

Uneven Investor Sentiment Toward Hardline Retailers Could Persist Amid Macro Headwinds, UBS Says

Investor sentiment toward US hardline retailers has become uneven and is likely to remain so unless macroeconomic headwinds dissipate, UBS Securities said in a note e-mailed Friday.Describing the prevailing mood as "a mix of apathy, caution, and chagrin," the brokerage said investors have become increasingly selective about hardline retail stocks amid a lack of long-term secular growth potential for the sector."Headlines surrounding affordability pressures, interest rates, inflation, labor market disruption, tariffs, freight costs, and geopolitical instability have created a backdrop that feels persistently unsettled," UBS analysts, including Michael Lasser, said in a note to clients. "As a result, many investors increasingly view the sector through a defensive lens rather than an aspirational one."Last month, official data showed that US inflation accelerated sequentially in July, while consumer spending growth eased. A University of Michigan survey showed that consumer sentiment in the country dropped in August amid concerns that inflation will continue to be high for the "foreseeable future."Dollar stores have seen an acceleration recently, while retail giant Walmart (WMT) and Costco Wholesale (COST) have seen a "moderation," sparking renewed debate about changing consumer behavior, UBS said."Investors continue to monitor credit card delinquencies, wealth effects tied to equity markets, and fuel prices as key variables that could shape spending patterns over the next several quarters," the analysts wrote.Walmart seems to be undergoing "a gradual regeneration" of its shareholder base, according to the brokerage. "The prevailing view is that the stock may remain range-bound near term as investors wait for proof that the most compelling elements of the investment thesis can translate into tangible financial outcomes," the analysts said.Costco's latest sales data reignited debate over whether the warehouse chain's recent performance reflects "continued deceleration or the early stages of stabilization," UBS said."Bulls remain focused on traffic growth, membership engagement, and the enduring strength of Costco's flywheel," the analysts wrote. "Skeptics question whether the stock can continue to command its premium valuation if the business settles into a slightly lower long-term comp framework."Following a few quarters of mid-single-digit comparable sales growth at Target (TGT), the investor discussion has moved to debating the retailer's long-term earnings potential from questioning the business' relevance, according to the note.Walmart, Dollar General (DG), Dollar Tree (DLTR), Best Buy (BBY), Home Depot (HD), and Tractor Supply (TSCO) are generally seen as tariff refund beneficiaries, while Target, Williams-Sonoma (WSM), and Five Below (FIVE) are "more commonly" viewed as the companies on the other end of the spectrum, UBS said."This distinction may become increasingly important as investors begin to focus on the anniversary of these benefits and their second- and third-order implications for margins, pricing strategies, and earnings growth moving into next year," the analysts said.Price: $107.27, Change: $-1.15, Percent Change: -1.06%

$BBY$COST$DG$DLTR$FIVE$HD$TGT$TSCO$WMT$WSM
Wire

Costco's Underlying Trends Remain Resilient Despite August Headwinds, UBS Says

Costco Wholesale's (COST) underlying trends remained resilient despite calendar-related headwinds, with August core comparable sales growth remaining broadly within the company's recent range, UBS said in a note emailed Thursday.UBS said the moderation in August appears attributable to temporary factors, including the Labor Day timing shift, and Canadian weakness.The brokerage said US traffic remained broadly in line with Costco's trailing 12-month trend, while the company's digitally enabled sales growth accelerated modestly to 17.9% from 17.7% in July."We continue to believe COST remains one of the strongest operators in retail, with underlying trends that remain broadly consistent with recent performance," UBS said.UBS maintained its buy rating and $1,275 price target on the stock.Price: $927.43, Change: $-1.06, Percent Change: -0.11%

$COST
Wire

Costco Wholesale Reports 'Stable' US Comparable Sales Trends in August, Oppenheimer Says

Costco Wholesale (COST) has reported "stable" US comparable sales trends in August, with its adjusted comp excluding gas increasing about 6.4%, assuming a 75 basis points headwind related to Labor Day weekend shift, Oppenheimer said in a Wednesday note.Similar to other recent data points, grocery sales softened further with the food and sundries category increasing in the low single-digits compared with low to mid-single-digits in July and mid-single digit type growth earlier in the year, Oppenheimer said.Looking ahead, Oppenheimer continues to see the potential for a special dividend and/or a stock split, which could represent a positive catalyst for shares, according to the note.Oppenheimer maintained its outperform rating with a $1,160 price target.Price: $928.13, Change: $-0.35, Percent Change: -0.04%

$COST
Consumers Look to Congress for Relief as Companies Cash Tariff Refund Checks
US Markets

Consumers Look to Congress for Relief as Companies Cash Tariff Refund Checks

The majority of US companies holding $100 billion in potential tariff refunds haven't pledged to return the money to consumers, concerning advocates who say corporations have a "moral obligation" to return the funds to people who paid elevated prices for products they purchased.Companies including FedEx (FDX), Amazon (AMZN), Nike (NKE), Walmart (WMT), Target (TGT) and Apple (AAPL) have reported billions of dollars in collective tariff recoveries, temporarily boosting their earnings and cash flow.' review of earnings documents and conference calls found that the biggest reported refunds included Walmart, at nearly $2.9 billion; Target and Nike, at a little less than $1 billion each; FedEx, at $800 million; and Amazon, at $600 million.Apple hasn't disclosed the dollar amount for the windfall, but quantified the margin boost in its earnings release. The Wall Street Journal put Apple's tariff refund-related gain at nearly $2.2 billion. Tool manufacturer Stanley Black & Decker (SWK) booked a $118 million benefit.FedEx, Amazon and Costco Wholesale (COST) plan to return amounts to eligible customers, as per comments on their most recent earnings calls. But most businesses either have different plans for the additional money or have been mum on how to use tariff refunds.That doesn't satisfy some consumer advocacy groups that say regulatory or congressional intervention may be needed to make certain that money is passed through to hard-hit consumers.Companies have "a moral obligation" to return the money to consumers, ideally in the form of direct repayments, a spokesperson for the Consumer Federation of America said in remarks emailed to.While rebates and discounts are also viable options, those programs could be used as a tactic to charge consumers more on other products, Emily Peterson-Cassin, director of competition and market fairness at the advocacy group, said.Retail giants Walmart and Target plan to keep prices low generally, while Apple and Stanley Black & Decker intend to channel the additional cash back into the business, their executives told analysts on the earnings calls.Plumbing and home-improvement product maker Masco (MAS), which booked a $95 million net tariff refund, said it aims to use the money for share repurchases or acquisitions. Nike hasn't publicly stated its plans for the windfall."A profit-maximizing entity like a corporation will do what they think serves them best. And that could include keeping prices higher because we've gotten used to higher prices," Peterson-Cassin said."That's why we need regulatory intervention to ensure the money ends up in the hands of consumers where it belongs."Nonprofit group Public Citizen called on Congress to scrutinize the tariff refund processes "to prevent mismanagement and abuse," according to its statement to the House Ways and Means Committee in May.And the concern over a lack of a framework that guides the use of these refunds isn't limited to lobby groups. Wall Street giant Goldman Sachs said companies are using tariff refunds for a wide range of initiatives, including boosting marketing budgets and expanding share buyback programs."Companies are treating (more than $100 billion) in tariff refunds issued so far as a one-time windfall and using them to increase marketing budgets, offset ongoing cost headwinds, lower consumer prices, increase buybacks, and, in a few cases, issue refunds to customers," Goldman Sachs said in a weekly update on Aug. 17.US Customs and Border Protection has so far returned about $100 billion in tariff revenue to the Treasury Department for onward disbursement, according to a recent filing with the Court of International Trade. That followed the Supreme Court's February decision to strike down the Trump administration's tariffs implemented under the International Emergency Economic Powers Act.Earlier this year, the National Retail Federation said not every retailer lifted prices as a result of tariffs, suggesting consumers might not see broad-based price reductions."Many retailers absorbed the increased costs, adjusted their product mix or took other steps rather than increase prices," the National Retail Federation said at the end of April. "Their response to tariff refunds will be similar. Retailers will have a range of options to offset tariff-related costs and reinvest where it matters most: the business, their workforce and consumers."Rep. Rosa DeLauro (D-Conn.) introduced the Tariff Relief for Consumers Act in March to ensure that companies pass down tariff refunds to shoppers. Consumer Federation of America is one of the endorsers of the bill, which hasn't passed the House yet."I hope Congress steps in and sets some guardrails for consumers here, but unfortunately I don't think Congress has enough will around this issue to take bold steps yet," Peterson-Cassin of Consumer Federation of America said."I do think that putting money back in the hands of consumers during an affordability crisis should be among their top priorities, so perhaps they will prove me wrong!"When reached out for comment, Walmart and Amazon pointedto comments made on their most recent earnings calls. FedEx said it has started processing refunds to customers.Other companies mentioned in the article didn't respond to.

$AAPL$AMZN$COST$FDX$MAS$NKE$SWK$TGT$WMT
Dollar Tree Likely To Lift Full-Year Outlook, Oppenheimer Says
US Markets

Dollar Tree Likely To Lift Full-Year Outlook, Oppenheimer Says

Dollar Tree (DLTR) is likely to raise its full-year outlook, with management expected to strike an upbeat tone on the business, Oppenheimer said in a Friday client note.Oppenheimer believes the discount retailer's senior management could tweak its fiscal 2026 guidance higher to reflect potential second-quarter upside and completed share repurchases. In May, Dollar Tree said it expected adjusted EPS to come in between $6.70 and $7.10 on comparable sales growth of 3% to 4% for the ongoing fiscal year.The brokerage estimates the company to record EPS of $7.05 in the year, up from its previous projection of $6.80, while continuing to expect same-store sales growth of 3.2%. Oppenheimer noted its forecast doesn't include any benefits related to tariff refunds, as it expects them to be fully reinvested back into the company in the form of lower prices or to mitigate inflationary headwinds from fuel.Dollar Tree is scheduled to release its latest financial results next week.The brokerage estimates Dollar Tree to record per-share earnings of $1.13 for the second quarter, up from its previous forecast of $1.08. In May, the retailer said it expected the metric to come in between $1 and $1.15, while the current average analyst estimate on FactSet is for $1.14."Investor sentiment has clearly improved toward the company's prospects, in our view," Oppenheimer analyst Rupesh Parikh wrote in the note. "As we look at the (second-quarter) fundamental setup, we expect another beat-and-raise delivery and upbeat tone from the management team."Oppenheimer expects Dollar Tree to record comparable sales growth of 3% and believes the market's forecast of 3.1% is "achievable," as it believes the retailer will continue to benefit from its initiatives and trade-in customers. The consensus on FactSet is for same-store sales to increase by 3.2%.Oppenheimer has a perform rating on Dollar Tree's stock. The retailer's shares were up 1.1% in Friday trading.Walmart (WMT) on Thursday reported better-than-expected fiscal second-quarter results, although US comparable sales growth decelerated more than Wall Street projected amid a pharmacy-related headwind.Earlier in the week, Target (TGT) lifted its full-year outlook as tariff refunds helped double the retailer's fiscal second-quarter earnings year over year. Off-price retailer TJX (TJX) also raised its full-year earnings outlook.Price: $130.62, Change: $+2.17, Percent Change: +1.69%

$COST$DLTR$TGT$WMT
BJ's Wholesale Club Fiscal Second-Quarter Results Top Views; Raises Full-Year Earnings Outlook
US Markets

BJ's Wholesale Club Fiscal Second-Quarter Results Top Views; Raises Full-Year Earnings Outlook

BJ's Wholesale Club's (BJ) fiscal second-quarter results came in ahead of Wall Street's estimates, prompting the warehouse club operator to lift its full-year earnings outlook.The company on Friday reported adjusted earnings of $1.36 a share for the quarter ended Aug. 1, up from $1.14 the year before, exceeding the FactSet-polled consensus of $1.17. Overall revenue climbed 16% to $6.23 billion, topping the Street's view for $5.97 billion.Comparable club sales, excluding the impact of gasoline sales, increased 3.1% and were ahead of the market's forecast for a rise of 2.6%. The stock gained 4.7% in Friday trading."Our second-quarter results reflect strong execution and continued momentum in the business," Chief Financial Officer Laura Felice said in a statement. "We delivered solid profitability, grew membership fee income, and outperformed on gas -- all of which enabled us to raise our full year adjusted EPS guidance."BJ's now anticipates adjusted EPS in the range of $4.60 to $4.80 for fiscal 2026, up from its previous guidance of $4.40 to $4.60. Comparable club sales, excluding gasoline, are still pegged to increase by 2% to 3%. The current average analyst estimate is for non-GAAP EPS of $4.53 and same-store sales growth of 2.5%.Last week, Deutsche Bank said in an emailed client note that it expected BJ's to deliver a "modest" second-quarter beat, while the brokerage lifted its same-store sales estimate for the warehouse club operator to 2.6%."We delivered a strong second quarter, coming in ahead of our expectations across sales and profitability, with strong membership momentum," BJ's Chief Executive Bob Eddy said. "Our value proposition continued to resonate with members in our clubs and at our gas stations."Members continued to show up at the company's gas stations amid elevated prices during the quarter, Eddy said during an earnings call, according to a FactSet transcript."Comp gallons were up double digits, accelerating from the strong results we saw in (the first quarter) and a clear signal of the share we continue to take," Eddy said on the call. "Strong volume growth, combined with favorable pullback from peak gas prices drove fuel profit dollars ahead of plan, which was a meaningful contributor to our overall results."US retail gasoline prices averaged $4.1092 per gallon on Friday, compared with $4.0776 a week ago and $4.0190 a month ago, according to data from AAA, a motoring and leisure travel membership organization that tracks fuel prices in the US.On Thursday, Walmart (WMT) reported fiscal second-quarter results, with US comparable sales growth slowing more than Wall Street expected amid a pharmacy-related headwind. Target (TGT) lifted its full-year outlook earlier in the week as tariff refunds helped double the retailer's fiscal second-quarter earnings year over year.Warehouse chain Costco Wholesale (COST) is scheduled to publish its latest financial results next month.Price: $95.29, Change: $+3.99, Percent Change: +4.37%

$BJ$COST$TGT$WMT
Target Raises Full-Year Outlook as Tariff Refunds Boost Second-Quarter Earnings
US Markets

Target Raises Full-Year Outlook as Tariff Refunds Boost Second-Quarter Earnings

Target (TGT) lifted its full-year outlook on Wednesday as tariff refunds helped double the retailer's fiscal second-quarter earnings year over year.Adjusted earnings are now anticipated to range from $9.90 to $10.90 per share for fiscal 2026, including tariff refunds that buoyed the second quarter by $1.65, the company said. It previously projected the metric in a range of $7.50 to $8.50.Earlier this year, the US Supreme Court ruled that the Trump administration lacked authority under the International Emergency Economic Powers Act to impose certain tariffs, paving the way for refunds to companies that had paid the duties.Sales are pegged to grow by about 5% for the ongoing fiscal year, one percentage point higher than Target's previous guidance. The Street is looking for sales of $109.02 billion, reflecting an annual increase of 4%.For the three months through Aug. 1, Target's adjusted EPS jumped 100% to $4.11, exceeding the average analyst estimate of $2.35. The topline improved 5.3% to $26.54 billion in the second quarter, ahead of the Street's view for $26.13 billion.Shares of the company rose 5.2% in Wednesday trade, taking their year-to-date gain to 64%."We saw broad-based growth across multiple dimensions of our business and importantly, the strength on the top-line translated into strong underlying profit performance as well," Chief Financial Officer Jim Lee said during an earnings call with analysts, according to a FactSet transcript.Comparable sales rose 3.8%, more than the market's forecast for a gain of 2.4%, as traffic rebounded.Truist Securities said the improvement in comparable sales and transactions underscore Target's investments in price and merchandise, among other areas.The retailer cut prices on more than 10,000 "frequently purchased items" over the past year, Target Chief Executive Michael Fiddelke said in a statement.Last week, Deutsche Bank and RBC Capital Markets said they expected Target to top consensus estimates for second-quarter comparable sales amid demand strength.On Wednesday, off-price retailer TJX (TJX) raised its fiscal 2027 earnings outlook, while home-improvement retailer Lowe's (LOW) lowered its full-year guidance to the bottom end of its previously issued forecast.Retail giant Walmart (WMT) is scheduled to release its latest results on Thursday, while department store operator Kohl's (KSS) financials are due next week. Warehouse chain Costco Wholesale (COST) is slated to publish its report next month.Price: $160.59, Change: $+8.11, Percent Change: +5.32%

$COST$KSS$LOW$TGT$TJX$WMT
Wire

Freshpet Poised to Deliver on Q2, Full-Year Financial Targets, Oppenheimer Says

Freshpet (FRPT) is well-positioned to deliver on Q2 expectations and full-year 2026 financial targets but is expected to reiterate its full-year outlook in the current challenging macro environment, Oppenheimer said in a Tuesday note.The company is slated to report its Q2 financial results on Aug. 5.Freshpet has been optimistic regarding its business performance through early June and remains confident in its competitive moat even with the entry of new competitors, Oppenheimer analysts said.Given the uncertain pet and consumer spending environment, as well as rising gas prices, the analysts believe that the company is likely to retain its full-year 2026 targets. Freshpet could also accelerate discretionary investments and boost advertising spending if the company outperforms the current expectations for the rest of the year, according to the note.With the company's products dominating Costco's (COST) refrigerated pet food sections, and more fridge islands seen at Walmart (WMT), Freshpet remains a "top pick" for Oppenheimer, the analysts said.Oppenheimer's rating on the company's stock is outperform with a price target of $80.Price: $61.74, Change: $+2.24, Percent Change: +3.76%

$COST$FRPT$WMT
Research

Citic Securities Initiates Costco Wholesale at Add With $1,041 Price Target

Costco Wholesale (COST) has an average rating of overweight and mean price target of $1,089.59, according to analysts polled by FactSet.

$COST
Wire

Costco Wholesale to Sustain Market Share Gains on 'Unique' Model, RBC Capital Markets Says

Costco Wholesale (COST) is well-positioned to continue gaining market share, supported by its "unique" business model, merchandising strength and investments in digital capabilities, RBC Capital Markets said in a note Monday.The brokerage said it expects "modest" margin expansion and high-single-digit to low-double-digit annual earnings-per-share growth over the medium term, driven by improving e-commerce economics and growing contribution from retail media, as tariff refunds potentially fund price reinvestment.RBC cited Costco's market share gains, "high income" customer base, membership-driven earnings, expansion opportunities, improving digital business and the potential for a special dividend over the next one to two years as key strengths.However, Costco's premium valuation, at about 37 times its fiscal 2028 earnings estimate and roughly 1.9 times the S&P 500 multiple, already reflects most of the company's positive fundamentals, limiting the potential for significant upside in the shares, according to the note.RBC Capital Markets initiated coverage of Costco with a sector perform rating and $1,000 price target.Price: $918.30, Change: $+2.05, Percent Change: +0.22%

$COST
Wire

JPMorgan Adjusts Costco Wholesale Price Target to $1,100 From $1,110

Costco Wholesale (COST) has an average rating of overweight and mean price target of $1,095.93, according to analysts polled by FactSet.Price: $929.80, Change: $-23.33, Percent Change: -2.45%

$COST
Asia Markets

Update: US Equity Futures Edge Higher Pre-Bell Amid Re-Escalation of Middle East Hostilities

(Updates with economic data, recent oil price movement, world markets' overview and corporate stock movements.)US equity futures were higher pre-bell Thursday as traders observed the recent rise in hostilities between the US and Iran, which threatened to derail peace talks between the two nations.Dow Jones Industrial Average futures were flat, S&P 500 futures were up 0.3%, and Nasdaq futures were 0.9% higher.In a post on X, US Central Command said it completed a second round of strikes, hitting 90 more Iranian military targets. The US military had struck 80 Iranian targets the day before in response to Iran's attacks on three commercial ships transiting the Strait of Hormuz.President Donald Trump told reporters that Iran had reached out and "badly" wanted to make a deal to halt the escalating hostilities in the Middle East. Trump said he does not know if the two nations are returning to an all-out conflict, but added that the US would win "very quickly" if the war resumed.Traders also digested the latest round of earnings, with PepsiCo (PEP) posting higher fiscal Q2 core earnings and revenue.Oil prices were higher, with front-month global benchmark North Sea Brent crude up 0.9% at $78.71 per barrel and US West Texas Intermediate crude 0.8% higher at $74.09 per barrel.Initial jobless claims dropped to 215,000 in the week ended July 4 from 217,000 in the previous week, compared with expectations for no change in a survey compiled by Bloomberg.The existing home sales report, scheduled for release at 10 am ET, is expected to show an increase of 1.0% for June after a gain of 3.2% in the prior month.New York Federal Reserve President John Williams and Dallas Fed President Lorie Logan are slated to speak on Thursday.In other world markets, Japan's Nikkei closed 1.4% higher, Hong Kong's Hang Seng ended 0.7% lower, and China's Shanghai Composite finished 1.7% higher. Meanwhile, the UK's FTSE 100 was down 0.6%, and Germany's DAX index was 0.3% higher in Europe's early afternoon session.In equities, Costco Wholesale (COST) shares fell 1.7% after the company posted June net sales of $29.2 billion, up almost 11% from $26.4 billion a year earlier, and maintained its quarterly dividend at $1.47 a share.PepsiCo stock was down 2.5% after the company reported its fiscal Q2 financial results.Ionis Pharmaceuticals (IONS) and partner AstraZeneca (AZN) shares fell 19% and 7.8%, respectively, after they said a phase 3 trial for eplontersen in patients with transthyretin-mediated amyloid cardiomyopathy failed to meet the primary efficacy endpoint.On the winning side, Micron Technology (MU), AMD (AMD), and Intel (INTC) stocks rose as part of a broader rally in the semiconductor sector. Micron shares climbed 6.4%, AMD stock was up 4%, and Intel shares were 5.3% higher.Applied Materials (AMAT) shares rose 7.1% after a Nikkei Asia report citing CEO Gary Dickerson as saying that the company is seeing stronger long-term visibility into semiconductor equipment demand as major chipmakers share production plans extending well beyond 2027.

Dow JonesNasdaq CompositeS&P 500$AMAT$AMD$AZN$COST$INTC$IONS$MU$PEP
Wire

Costco Wholesale Reports Higher June Sales, Maintains Quarterly Dividend

Costco Wholesale (COST) on Wednesday reported June net sales of $29.2 billion, up almost 11% from $26.4 billion a year earlier.The company maintained its quarterly dividend at $1.47 a share, payable Aug. 7 to stockholders of record July 24.Costco shares fell 1.5% in after-hours trading.

$COST
Grocer Discounts Amid High Food Prices Raise Margin Concerns Ahead of Fourth of July
US Markets

Grocer Discounts Amid High Food Prices Raise Margin Concerns Ahead of Fourth of July

Grocers are offering discounts ahead of the Fourth of July holiday as they battle for consumer dollars amid rising food prices that some experts say may affect profit margins.The overall cost of food rose 3.1% in the 12 months through May, the US Bureau of Labor Statistics said on June 10. Food-at-home prices were up 2.7%, and food away-from-home increased by 3.5% from the same month last year.An Independence Day cookout for 10 people will cost $73.82 for a basket of 10 items including cheeseburgers, chicken breasts, potato salad and ice cream, up 4% year over year, according to the American Farm Bureau Federation, an advocacy group for farmers in the US.Food prices have surged as consumers faced higher energy prices, the impact of tariffs and drought conditions in growing areas globally. That's left grocers such as Kroger (KR), Albertsons (ACI) and Sprouts Farmers Market (SFM) to compete for budget-strapped customers by offering lower prices.Investors are taking a wait-and-see approach on whether cutting food bills will affect retailers' bottom lines at a time when demographics are changing and appetites are already reduced from the rising use of GLP-1 weight-loss medications, said Scott Mushkin, chief executive of R5 Capital, a consumer consulting and research firm. Grocers so far haven't mentioned lower margins due to discounted prices but it's "100%" something about which the market is concerned, he said."When there's declining volumes, the only way to get market share or get your volumes flat to positive is to win share from somebody else," Mushkin said in an interview with. "You're seeing more and more companies talk about investing in prices, which means just lowering prices."Kroger, the largest traditional US grocery store with a market capitalization of roughly $34 billion, said Friday it would offer specials on several items including soft drinks, dips and dinner sausages, ahead of the Fourth of July.The effects of the company's self-funded price investments -- when a grocer lowers a price to increase volume and stay competitive with rivals -- remain to be seen, Morgan Stanley said in a note to clients. Still, they lowered their 12-month price target on the company to $67 from $73.Kroger Chief Financial Officer David Kennerley said on the company's June 18 earnings call that food inflation in the first quarter came in at the low end of the retailer's expectations. But he still expected inflationary pressures to increase in 2026 amid the broader macro environment.Oppenheimer analysts said in a report last week that Kroger is implementing pricing efforts in some test markets and has seen positive results including gaining market share. Kroger's goal, the analysts said, is to capture more of the consumer basket without being the lowest-cost retailer. That, in turn, will reduce risk to margins."Management is testing these efforts in more stores," Oppenheimer said. "The company does not seem to be aiming to be the lowest price retailer, which, in our view, should minimize the risk of any price war."Sprouts Farmers Market, with a market value of about $8 billion, and Albertson's, with a $6.6 billion cap, are also offering discounts on meats, vegetables and desserts ahead of the Independence Day weekend.Despite rising food costs, spending on food for the Fourth of July is expected to increase this year.About 62% of Americans plan to celebrate with a barbecue or picnic and will spend $9.4 billion on food, up from $8.9 billion in 2025 and on par with 2024 levels, according to a survey of 7,675 consumers by the National Retail Federation. This is historically high with spending ranging from $6.3 billion to $7.7 billion between 2014 and 2022.Ricky Volpe, an economist in the College of Agriculture, Food & Environmental Sciences at Cal Poly San Luis Obispo, said he expects grocers' margins to decline amid discounts ahead of and after Saturday's holiday, but volume to increase as prices decline.That'll increase opportunities for grocers to capitalize on bigger basket sizes, said Volpe, who previously researched food-price formation, competitiveness in the food industry and forecasted retail food price inflation at the USDA's Economic Research Service.Rising inflation may lead some consumers to discount retailers that sell food at a lower average price. Big box stores such as Walmart (WMT) and Costco Wholesale (COST) will likely see strong growth over the next six to 12 months, Volpe said."We historically see their revenues, market share and even overall profitability increase during challenging inflationary times like this," he said. "They're always taking market share away from the traditional."Discounts will likely continue beyond the Fourth of July, though retailers may offer lower prices on their own products rather than larger brands, Volpe said."We will probably, looking into the back half of the year, see intensified promotional activity for store brands and private labels relative to national brands because retailers typically have more control over their own brand prices and operate on higher average markups or margins for their own brand prices."Marcy Nicholson

$ACI$COST$KR$SFM$WMT
Insider Trading

Costco Wholesale Insider Sold Shares Worth $847,345, According to a Recent SEC Filing

Kenneth D Denman, Director, on June 23, 2026, sold 885 shares in Costco Wholesale (COST) for $847,345. Following the Form 4 filing with the SEC, Denman has control over a total of 4,779 common shares of the company, with 4,779 shares held directly.SEC Filing:https://www.sec.gov/Archives/edgar/data/909832/000090983226000053/xslF345X05/form4.xml

$COST
AI Likely to Become Functional Part Across Retail Operations, UBS Says
US Markets

AI Likely to Become Functional Part Across Retail Operations, UBS Says

Artificial intelligence will likely become a functional part across retail operations, with implications ranging from demand generation to cost structures, UBS Securities said in a note emailed Friday.The US hardline and food retail sector has mostly used AI in areas such as marketing, customer service chatbots and basic inventory optimization, the brokerage said.However, the technology is now being adopted more broadly across different functions, UBS analysts, including Michael Lasser, said."As consumers increasingly rely on large language models and agentic systems to discover, evaluate, and purchase goods, traditional traffic channels -- stores and websites -- may become less central," Lasser said. "This raises important questions around traffic monetization, particularly for high-margin businesses such as retail media."UBS expects higher-income consumers to influence demand dynamics, as the top 10% of households dictate about half of all spending.AI may exacerbate income inequality, benefiting premium categories and adding pressure on value-oriented segments, according to the UBS note. This means retailers may have to alter strategies to reflect "a more bifurcated consumer landscape."Retailers that use AI-driven marketing are likely to see improved customer acquisition efficiency, Lasser said.On the cost management front, he said working capital needs could drop due to the automation of repetitive processes and improved inventory management systems.While AI helps improve accuracy in stores and distribution centers, it introduces new costs, including cloud computing, data governance and cybersecurity, Lasser said.Retailers with integrated ecosystems are likely best positioned to benefit from mounting AI adoption, according to UBS. They include Walmart (WMT), Costco Wholesale (COST), Target (TGT), Home Depot (HD), Lowe's (LOW) and Kroger (KR).Also on that list are AutoZone (AZO), O'Reilly Automotive (ORLY), Wayfair (W) and Williams-Sonoma (WSM).Price: $120.42, Change: $-0.08, Percent Change: -0.07%

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Sectors

Sector Update: Consumer Stocks Mixed Late Afternoon

Consumer stocks were mixed late Thursday afternoon, with the State Street Consumer Staples Select Sector SPDR ETF (XLP) decreasing 0.4% and the State Street Consumer Discretionary Select Sector SPDR ETF (XLY) adding 0.4%.In corporate news, Walmart (WMT) investors voted against a proposal asking the retailer to report on how its use of AI is affecting worker well-being, Reuters reported, citing preliminary voting results from the shareholder meeting. The shareholder proposal was filed by United for Respect, the report said. Walmart shares were up 0.5%.General Motors (GM) has rehired more than 100 members of its Cruise unit's team 18 months after killing off the self-driving vehicle unit, The Information Electric reported, citing Rashed Haq, GM's vice president of autonomous vehicles. GM shares were up 1.9%.Costco (COST) shares rose 0.8% after the company reported net sales of $24.01 billion in May, up from $20.97 billion a year earlier.Hyatt Hotels (H) shares climbed 1.8% after HSBC upgraded the stock to buy from hold with a price target of $212 per share.

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Costco's Debt Issuance Filing Could Mean Special Dividend on the Cards, Truist Says
US Markets

Costco's Debt Issuance Filing Could Mean Special Dividend on the Cards, Truist Says

Costco Wholesale's (COST) recent regulatory filing to issue debt indicates the company could be preparing to declare a special dividend, Truist Securities said Thursday.On Wednesday, the warehouse club operator filed a shelf registration statement with the US Securities and Exchange Commission covering the potential sale of debt securities from time to time."A special dividend may be coming soon, which we estimate could be around $30 or a (roughly) 3% yield," Truist Managing Director Scot Ciccarelli said in a note to clients Thursday.Costco has roughly $19 billion in cash, with more than $13 billion in net cash, prompting the brokerage to speculate about a special dividend."We think the only reason the (company) would need to raise debt capital would be to fund a special dividend, which is something (it) has done every few years in the past as way to enhance shareholder value," Ciccarelli said.Assuming a $30 dividend, it would equate to a little more than a $13 billion payout, Truist said. The company could fund $8 billion to $10 billion of that amount with debt and the remaining with cash, according to the note.Also on Wednesday, Costco reported net sales of $24.01 billion for May, up nearly 15% year over year. Consolidated comparable sales rose 12.5%, with the US seeing a 13.7% gain."Costco continues to underscore its ability to cater to its increasingly value-driven consumer base that's undergoing greater pressure with its extreme value proposition," Ciccarelli said Thursday. "May's results are tracking ahead of our (fourth-quarter estimates) so far, but our estimates remain unchanged as comparisons get more difficult throughout the quarter."Costco shares were up 0.9% in late-afternoon trade. So far in 2026, the stock has jumped nearly 16%.Last week, the company's fiscal third-quarter revenue topped market estimates buoyed by its gas business amid high fuel prices, though earnings fell short of expectations.Price: $971.94, Change: $+10.10, Percent Change: +1.05%

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Wire

Costco Wholesale May Sales Show 'Steady Execution,' UBS Says

Costco Wholesale's (COST) sales results in May demonstrate "steady execution" amid concerns about higher energy costs, elevated interest rates and less benefit from tax refunds, UBS Securities said in a note emailed Thursday."At least for Costco, this isn't occurring," UBS said, referring to fears of a weakening consumer. "In fact, we'd argue its strong momentum indicates its value proposition is even more compelling in this type of environment."The warehouse retailer's investments in pricing on consumable items delivered a "healthy return" through accelerated comparable sales, UBS said.UBS maintained its buy rating and $1,275 price target on the stock.Price: $972.34, Change: $+10.51, Percent Change: +1.09%

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