Costco faces margin pressure as BofA cuts price target

Costco and DoorDash expanded their partnership to offer same-day delivery from all U.S. Costco warehouses. Members can order groceries, electronics, and more via DoorDash. According to DoorDash, this move meets high customer demand and enhances shopping flexibility. DoorDash (DASH) is a leading local commerce platform.

Costco and Uber Eats have expanded their U.S. partnership to 47 states, covering 600 locations. This follows Costco's 20.9% rise in digital sales last fiscal year. The deal offers cross-membership benefits, including discounts on Uber One and Costco memberships. Costco reports earnings on Sept. 24.

Jim Cramer expressed concerns about Costco Wholesale Corporation (COST), questioning its appeal to younger generations and its high valuation. Despite a 5% stock decline, Cramer noted Costco's strong Q4 sales growth (11.3%) and digital sales increase (19.5%), but also pointed to shrinking merchandise margins and static membership renewal rates. Hedge fund ownership remained stable, with 104 funds holding stakes in Q2.

The U.S. Department of Justice is investigating eight grocery chains, including Kroger, Walmart, and Amazon, for potential beef price-fixing. The probe follows claims of inflated meat prices. The average ground beef price rose 10% to $6.89 per pound. The Trump administration plans to ease tariffs on imported ground beef to lower prices, but ranchers express concerns about the impact on their businesses.

The DOJ expanded its antitrust probe into beef prices to include eight major grocery retailers, seeking records on pricing, costs, and profit margins. The investigation follows a 74% increase in ground beef prices from 2020 to 2026. The DOJ previously targeted major meatpackers, with Tyson Foods settling a lawsuit for $82.5 million. The probe aims to address rising beef prices and their impact on consumers.

Costco reported Q4 net sales of $93.9B, up 11.3% YoY, with digital sales growing 19.5%. Comparable sales rose 9.4% globally, with U.S. sales up 10.7%. Target and BJ's also showed digital growth, with TGT's net sales up 5.3% and BJ's up 15.9%. COST shares fell 6% in 3 months, trading at a forward P/E of 40.71.