Brian Sozzi Discusses Costco CEO Leaving

Brian Sozzi of Wall Street Strategies is out with a research report discussing Costco's (NASDAQ: COST) earnings, as well as the CEO Jim Sinegal, leaving.

In the note, Sozzi writes, "August was a period like many others for Costco throughout the economic recovery, showcasing an upper middle income consumer continuing to be fully engaged in the process of saving where applicable. Furthermore, the acceleration in Costco's traffic month to month, off already stellar levels, coincides with an ongoing consolidation of trips by households to those destinations conveying one-stop shopping convenience or unmatched value, two top names here being Costco and Target (TGT)."

He goes on to discuss the fact that Costco had fourth quarter net sales of $27.6 billion, which is important because it excludes membership sales. Sozzi also said that California is helping sales, as opposed to hurting it, which it had been doing previously. He said that Hurricane Irene did affect sales negatively in the Northeast slightly, thanks to temporary store closures. He also believes that "Costco theoretically could issue a meaningful dividend increase in the immediate future" thanks to a strong quarter and large amount of cash on the books.

Sozzi concludes the note by talking about Sinegal leaving and what he meant for Costco. He is being replaced by Craig Jilenek, the former COO and President of Costco. Sozzi writes, "Jilenek has seriously big, big shoes to fill. I would compare it to the torch being passed to Lou Gehrig from Babe Ruth. Keep in mind, Sinegal is not just any ole founder. This is a man who pioneered how we consume goods and services on a daily basis, bringing an entirely new retail model to life. If Sam Walton gets credit for creating discount retail as we know it, than Jim Sinegal deserves oodles of praise for thinking outside of the box (enormous package sizes plus having the stores representing the warehouse, instead of operating numerous distribution facilities). If one wants to say he is the Steve Jobs of warehouse retailing, I would be perfectly comfortable with that characterization."

Shares of COST closed at $78.54 yesterday.