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Costco (COST) rang up strong sales in December, making the membership warehouse retailer a clear winner during the holiday shopping season. Comparable sales, excluding changes in gasoline prices and FX impact, increased 8.1%, outpacing gains of 4.4% in November and 3.4% in October.

• COST was a popular shopping destination in December as customer traffic jumped by 7.5%, indicating that it continues to take market share from other retailers, including grocery store chains. On that note, food and sundries was a standout merchandise category once again, up by high-single-digits, reflecting consumers' desire to find value in buying items in bulk.
• When COST reported upside Q1 results on December 14, it was evident that the holiday shopping season was going better than many had anticipated. And it wasn't just holiday meals and pies that its customers were buying. 
• After a few rough quarters, big-ticket items saw an upswing in sales, including a mid-20% increase in appliances sales. TVs, jewelry, and electronics also bounced back, helping to push Q1 eCommerce same store sales higher by 6.3%. Notably, big-ticket categories account for about 50-60% of COST's total eCommerce sales.
• That momentum carried into December as non-food categories experienced a high-single-digit increase. Jewelry, gift cards, and tires were particularly strong, helping to offset softness in toys, sporting goods, and seasonal products. Bolstered by this improvement in non-food sales, eCommerce same store sales were up an impressive 17.4%, although COST did lap a favorable yr/yr comparison of -5.4%. 

The main takeaway is that COST emerged as a holiday shopping season winner, as reflected in the stock's 15% gain since mid-November. Following the company's upside Q1 earnings report, the solid December sales results doesn't come as a huge surprise. Looking ahead, the next meaningful catalyst could come in the form of an overdue membership increase -- something that COST CFO Richard Galanti has said is a matter of when, not if.