Lululemon sues Costco for selling alleged dupes of its products
A lawsuit filed in a California court recently alleges Costco sells dupes of Lululemon's Scuba hoodies and sweatshirts, Define jackets and ABC pants.
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Globe and Mail
a day ago
- Globe and Mail
Best Stock to Buy Right Now: Target vs. Costco
Key Points Costco has 80 million paid household members. Target recently raised its dividend for the 54th consecutive year. Target favors share repurchases, while Costco prioritizes maintaining a strong balance sheet. 10 stocks we like better than Costco Wholesale › Costco Wholesale (NASDAQ: COST) and Target (NYSE: TGT) are two of the most recognizable names in American retail. While both have been longtime winners for shareholders, their stocks have lost steam in recent months. However, when established leaders hit a rough patch, it can create a timely opportunity to invest at a more reasonable price. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More » Let's take a closer look at the valuation, shareholder returns, and recent financial performance to see which of these retail giants looks like the better buy today. Does Costco or Target have a better valuation? Valuation is critical in determining whether a stock is priced attractively relative to its earnings potential. It helps investors gauge whether they're paying a fair price, a premium, or a potential bargain. Target and Costco are blue chip retailers, but the market values them differently. Costco, up just 2% in 2025, carries a market capitalization of more than $413 billion -- nearly 3 times the $47 billion of Target, which has seen its stock fall 23% year to date. That gap reflects investor confidence in Costco's steady growth and recurring membership revenue, while Target continues to work through declining sales. Costco trades at a trailing price-to-earnings (P/E) ratio of 52.8 -- well above its three-year median of 46.5 -- suggesting the stock may be richly valued. In contrast, Target trades at just 14.6 times trailing earnings, below its three-year median of 17, pointing to a potential discount. While valuation alone doesn't tell the whole story, it's a meaningful starting point, and in this case, Target has the edge over Costco for investors looking for a discount. COST PE Ratio data by YCharts Returning capital to shareholders Costco recently increased its quarterly dividend from $1.16 to $1.30 per share, its 21st consecutive annual raise -- bringing its yield to a modest 0.56%. While the yield may seem low, Costco has a track record of rewarding shareholders with sizable special dividends during periods of strong cash flow. In fact, it has issued five special dividends over the past 13 years, including a $15-per-share payout in January 2024. With a conservative payout ratio of just 20%, Costco has plenty of room to continue growing its dividend in the years ahead. Target, meanwhile, is a Dividend King -- having raised its dividend for 54 straight years. Its most recent increase bumped the quarterly distribution from $1.12 to $1.14 per share, translating to a 4.4% yield, one of the most generous among major retailers. Notably, its 49% payout ratio leaves room for management to continue its tradition of dividend hikes. When it comes to share repurchases, Target has been the more aggressive player. It bought back $251 million worth of stock last quarter and has reduced its outstanding share count by 9.3% over the past five years. However, with the stock trading near multiyear lows, some may question the effectiveness of those buybacks. Costco, by contrast, takes a more conservative approach, spending $215 million on repurchases last quarter, mainly to offset dilution. Over the past five years, its share count has remained essentially unchanged. For income-focused investors, Target's generous yield and long-standing dividend track record are hard to beat. But its buyback strategy hasn't always delivered the intended value. Costco's disciplined approach, lower payout ratio, and history of special dividends offer a different kind of appeal. Ultimately, both companies prioritize rewarding shareholders, making this category a tie. Recent financial performance and outlook For the final, and arguably most important, category for future stock appreciation, let's examine each company's recent financial performance and near-term outlook. Costco continues to deliver strong, consistent results. In its most recent quarter, the company reported $62 billion in revenue, an 8% increase year over year, driven by its 80 million paid household members. Net income rose 13% to $1.9 billion, and comparable sales (excluding the effects of gas prices and currency fluctuations) climbed 8%. E-commerce was particularly strong, growing 15.7%. While Costco doesn't provide formal financial guidance, CEO Ron Vachris expressed confidence heading into the final quarter of fiscal 2025, saying, "While the impacts of tariffs and the outlook for the economy in general remain unknown, we are confident in the ability of our operators and merchants to rise to the challenges and continue to offer great service and find consistent values for our members." Vachris' confidence is supported by the company's membership renewal rates of 92.7% in the U.S. and Canada and 90.2% globally. Target's latest quarter, by contrast, was more uneven. Revenue declined 2.8% to $23.8 billion, with comparable store sales down 5.7%. However, digital was a bright spot, with online sales up 4.7% thanks to a 36% increase in same-day delivery. Excluding a one-time legal settlement, adjusted earnings per share (EPS) came in at $1.30, down sharply from $2.03 the year prior. CEO Brian Cornell acknowledged the challenges: "I want to be clear that we're not satisfied with this performance, and we're moving with urgency to navigate through this period of volatility." Looking ahead, Target management expects adjusted EPS of $7 to $9 for 2025, compared to $8.86 in 2024 -- signaling continued uncertainty in the months ahead. All told, Costco's consistent top- and bottom-line growth, strong digital momentum, and unmatched member loyalty give it a clear advantage in this category. Which stock is the better buy? Both Target and Costco have their strengths. If its turnaround efforts succeed, Target offers a higher dividend yield, cheaper valuation, and upside potential. On the other hand, Costco continues to deliver impressive growth, fueled by its membership model and global footprint. In a more uncertain economic environment, Costco's consistency and proven membership model make it the better buy for most long-term investors, especially considering that Costco has a stronger balance sheet with $9.1 billion in net cash versus Target's net debt of $12.6 billion. COST Net Financial Debt (Quarterly) data by YCharts Should you invest $1,000 in Costco Wholesale right now? Before you buy stock in Costco Wholesale, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Costco Wholesale wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $625,254!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,090,257!* Now, it's worth noting Stock Advisor's total average return is 1,036% — a market-crushing outperformance compared to 181% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of July 29, 2025
CBC
2 days ago
- CBC
Should supermarket chains be allowed to sell their own private-label booze?
Ontario alcohol producers are urging Ford to say no to so-called private-label booze products, such as Costco branded wine and spirits. CBC's Lorenda Reddekopp explains why.
CTV News
3 days ago
- CTV News
Quebec retailers warned over price display violations
Pork chops are seen in the meat counter of a grocery store in Montreal, on Thursday, April 30, 2020. THE CANADIAN PRESS/Paul Chiasson Quebec's new rules on grocery store price displays and tipping have been in effect since May, but the province's consumer protection office says some grocers and retailers are not complying with key provisions. Metro, Costco, Couche-Tard and Adonis are among a dozen or so retailers that received non-compliance letters following audits conducted by the Office de la protection du consommateur. Under the new requirements, grocery stores must display information including the price per unit of measure and the price for customers who don't belong to a store's loyalty rewards program. The rules apply to any retailer that sells food. The province also raised the threshold for its existing price accuracy policy from $10 to $15. If the price at checkout is higher than the advertised price, the item must be offered for free if it costs less than $15. The policy has been in place since 2001. Based on the letters, most of the grocers targeted failed to clearly indicate whether taxes were included in the price. Some also did not display the regular price alongside the sale price or show the price per unit of measure using a consistent unit, making it harder for customers to compare similar products. According to the letters, most retailers had multiple violations, with fines ranging from $3,000 to $75,000 for a first offence. The following grocers and retailers received letters: Metro Costco Couche-Tard Adonis Giant Tiger Sobeys Avril Supermarché Santé Walmart Loblaws Les aliments Kim Phat These companies have until Aug. 8 to confirm in writing that they have implemented corrective measures. In a statement, Francis Mailly, a spokesperson for the Retail Council of Canada, said retailers are 'actively' working to comply with the new price requirements set out in Bill 72. 'While many items are already compliant, implementation remains a significant challenge due to the complexity of the labelling rules, technological limitations and ongoing labour challenges,' Mailly said. 'The industry remains fully committed to transparency and continues to make the necessary adjustments in good faith, despite operational constraints on the ground.' With files from the Canadian Press
