The relatively higher income shopper at Costco is doing better than the one taking the bus to a Family Dollar store. Fred Katayama reports.
The relatively high income shopper driving to Costco is doing better than the one taking the bus to a dollar store. Costco's comparable store sales rose a robust 6 percent last month as more people visited its warehouse stores. Higher beef prices beefed up sales of fresh foods, and consumers also spent on jewelry, clothing, lawn and garden and sporting goods. Guggenheim analyst John Heinbockel said, "Costco remains one of the few retailers consistently posting healthy comp sales momentum ... We believe a portion of this outperformance reflects a weather-oriented catch-up in the hardlines product category." And Janney Capital Markets raised its stock price target on Costco, saying it'll benefit from higher gas prices, strong traffic and diminishing negative impact from currency translations. On the other end, Family Dollar continues to struggle. It caters to lower-income shoppers. Its profit fell by a third in the latest quarter, and comparable store sales fell for the third straight quarter. Its stock fell at the start of trade. Although the economy is creating more jobs, lower-end consumers are struggling because wages have been stagnant. Wal-mart CEO Bill Simon told Reuters this week that the jobs recovery isn't giving its shoppers enough confidence to boost their spending.