7 Best Department Store Stocks to Buy According to Hedge Funds

2. Costco Wholesale Corporation (NASDAQ:COST)

Number of Hedge Fund Holders as of Q2 2024: 71

Costco Wholesale Corporation (NASDAQ:COST) operates a vast network of membership warehouses and e-commerce websites. It offers customers exclusive member services and convenience options through a wide selection of merchandise sold in its specialty departments. Its offerings range from warehouse ancillary and food to pharmacy, tire installation, food court, and other business offerings. Costco (NASDAQ:COST) operates through three segments: United States Operations, Canadian Operations, and Other International Operations. It has stores in several countries across the globe, including Taiwan, Korea, Sweden, and more.

The company hit its target of opening 30 new warehouse locations in fiscal 2024, which included one relocation and resulted in a total of 29 net buildings. It is also seeing significant opportunities across the globe, with its fiscal 2025 plan holding 12 of its planned 29 openings coming from outside of the US. The company expects to add 26 net new buildings in fiscal 2025.

It is also continually growing its e-commerce business, with Costco Logistics reporting a remarkable year. Improvements in the company’s assortments, scheduling functionality, and delivery times all contributed towards an improved member experience.

Costco’s (NASDAQ:COST) reported net income improved 9% year over year in fiscal Q4 2024, primarily due to such positive improvements. Net sales for fiscal Q4 2024 were $78.2 billion, undergoing a 1% increase from fiscal Q4 2023’s $77.4 billion. The company has found success in working with suppliers to localize the production of bulky items. These include laundry detergents, paper, and water. It is thus significantly reducing both the costs and emissions associated with shipment by manufacturing these goods closer to the countries they are sold in.

Since Costco (NASDAQ:COST) no longer has to ship millions of units of paper towels from the US to Asia, reduced freight has allowed the company to reduce the price by around 30%, or $8 per unit, in that market. With production ramping up, it is in the process of transitioning its other Asian markets to locally produce skews. This shift in production of paper towels will result in annual member savings of $30 million for the company.