Costco (NASDAQ:COST) is a consumer staples retailer, with most of its sales occurring in routine shopping categories like groceries and fresh foods. That differentiates it from Amazon, which gets the majority of its revenue from discretionary items like consumer electronics. The warehouse giant also gets most of its earnings from membership sales rather than product markups, which makes it operate more like a club than a traditional retailer.

Those two factors mean that the holiday shopping period isn't as much of a make-or-break moment for Costco as it is for many retailers. Yet that season is still important to Costco's annual results, so investors look forward to the retailer's December sales update each year.

That report came on Wednesday, and it points to continued positive momentum for the warehouse retailing leader.

A man buying eggs in bulk.

Image source: Getty Images.

Growing strong

Sales for the five weeks that ended on Jan. 5 jumped 10.5% to $17.04 billion, management revealed. After adjusting for new store openings and volatile price changes on gasoline, that growth figure landed at 7.8%. That's well above the 5% that Costco reported for its most recent full quarter and far higher than the 3% comps that peers like Walmart have been posting.

Investors can't conclude that Costco is running away with all the holiday sales growth, though. A quirk of the calendar pushed the high-volume shopping period around Black Friday a week later this year, and executives estimate that this move had a significant positive impact on reported sales in December. In fact, 20 percentage points of Costco's blistering 43% e-commerce growth likely came from the calendar shift. Likewise, the timing move pushed total sales and comparable-store sales higher by a full percentage point.

Zooming out reveals a less eye-popping growth figure that still translates into market share gains. Costco's adjusted comps are up 6.5% over the past 18 weeks in the U.S. market. That figure stood at 5% for the fiscal first quarter, which ended right before Black Friday. In other words, it's a good bet that Costco improved on the impressive 3.4% customer traffic increase it logged in Q1.

What we don't know

The December sales update left some open questions around the latest business trends, including whether Costco had to sacrifice much profitability to achieve its impressive growth. Considering its gross profit margin is already well below peers, it's not likely that investors will be surprised to see a decline in that metric when the company reports its full quarterly earnings results.

The more important numbers to follow in subsequent releases will be around membership trends like renewal rates, the penetration of executive subscriptions, and new sign-ups. Those official figures won't be revealed until Costco's second-quarter report in early March.

Before then, investors will get to hear from management during the company's annual shareholder meeting in late January. That presentation will likely include management commentary about industry trends, as well as how fiscal 2020 is shaping up nearly halfway through the year. If this week's sales report is any indication, then shareholders can expect to hear mostly positive news from CEO Craig Jelinek and his team as Costco looks ahead to the second half of fiscal 2020.

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