During the 2008 crash, Walmart was one of the few companies whose stock didn't take a hit at all but Costco's share price dropped almost half. They both provide essential goods at rock bottom prices. What was the reason for the big difference in performance?
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1Check their respective financials to see if that accounted for the difference in performance.– Bob BaerkerApr 3 '20 at 10:24
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2Any possibility that neither was affected by the 2008 financial crash, but Costco suffered from an entirely unrelated problem?– PhilippApr 3 '20 at 10:33
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2Walmart and Costco do not serve the same demographic for starters. (I would also not characterize Costco as providing rock bottom prices.)– pboss3010Apr 3 '20 at 11:54
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2Walmart did drop 25% during the 2008 crash. So you can't say it didn't take a hit at all.– mhoran_psprepApr 3 '20 at 14:34
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2Doing well in one particular recession is not the same thing as "recession proof".– ceejayozApr 3 '20 at 18:15
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Costco supplies a very large number of small businesses. If a large number of small businesses go bankrupt Costco takes a big hit.
Walmart's customers are mostly individuals, some small businesses. A large number of small businesses going bankrupt will not be as big of a hit to Walmart.
There's also the issue of having a membership fee. Membership fees are one of the earliest expense that people tend to cut when they get into financial hardships. If your current options are to pay $100 for a membership to costco or buying essential items you need for your household the choice is very obvious.
Once people have stopped paying membership fees they will not go back to costco until they're reasonably sure they can still afford it a year later.
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Do you know if the costco's earning went down significantly during 2007-2008?– bakaloloApr 4 '20 at 7:45
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I do not know. I'm also not sure whether or not it's even possible to get the information you want. I'm guessing you could try to read the 10-K filings from costco and look at the membership numbers and number of tickets and average basket.... I don't think that they publish either number by quarter– xyiousApr 6 '20 at 13:26