Costco downgraded as members-only retailer faces higher sales hurdles

A woman shops at a Costco Wholesale Corp. store in East Peoria, Illinois.

Daniel Acker | Bloomberg | Getty Images

A woman shops at a Costco Wholesale Corp. store in East Peoria, Illinois.

Tougher sales comparisons and food price deflation at Costco will cut into performance in 2019, according to Citigroup, which downgraded the membership-only retailer to neutral on Monday.

Citi analyst Kate McShane expects Costco to be a “standout” next year, but notes that the retailer faces “challenging comps in the coming months at a time when food deflation is coming into play.” At the same time, the contribution from e-commerce sales is diminishing and “the headwind from cannibalization may be ticking back up,” she said.

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