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Is Costco Broken?

By looking at its stock , trading right around all-time , you would never suspect that Costco Wholesale may not be what it once was.

To suggest otherwise is heresy Wall Street, especially if you throw in the company’s fortress- balance sheet and cash flow statements. And not forget that dividend.

But retailers, you also have to look same-store sales — usually defined sales of stores open more a year. And at Costco, if you go back more than a year — and strip the impact of gas inflation and foreign currencies — sales have been a slow bleed for more than a year, slipping to 5 percent last month.

Add back gas and foreign currency, and they’re freefall — a disappointing 3 percent last month, a quarter of it was a year earlier. And while renewal rates robust, in the past quarter there was a pronounced deceleration shopper frequency.

All of which the question: Is Costco broken?

Remember, we’re talking one of the best companies in America and certainly one of the greatest retailers in the . With only a few exceptions, its revenue growth back to the early 1990 has been the double-digits. Part of that is the result a steady stream of new store openings in U.S. and abroad, rising membership fees and uncanny customer loyalty.

But a company as good as Costco isn’t immune to forces its control.

And not broken, the question you’ve to ask: Has something outside of macro economic forces changed enough to affect the company the margin?

In this , I believe the “on the margin” is something intangible: A shift in demographics — more , the aging McMansion baby boomer population that has evolved downsized empty-nesters.

This is a theory I concocted in because I am one of . The very notion of this lit my Twitter, Facebook, and Google+ accounts when I floated the idea recently.

The reason is simple: As almost anybody in increasingly non-exclusive but continuously growing club (confirmed by Census Bureau stats) can say: We simply don’t buy as at Costco as we used to. My wife and maintain the Costco membership we had since we first signed in 1991 at the San Ramon, Calif., store. But our kids are of the house and we just don’t need as much stuff — certainly less stuff bulk.



Adapted and abridged from: CNBC, July 13, 2012.