Key Highlights
- The warehouse retailer posted fiscal Q4 earnings of $6.75 per share, surpassing Wall Street’s $6.54 consensus.
- Quarterly revenue jumped 11% from the prior year to $95.7 billion, exceeding the $94.9 billion estimate.
- Annual earnings increased 14% to reach $20.78 per share, while yearly revenue touched $303.1 billion.
- Membership fee revenue growth decelerated for the third consecutive quarter, raising investor concerns.
- Shares declined 1% on Thursday, settling at $896.48, still trading 18% under the 52-week peak.
Costco Wholesale delivered quarterly results that surpassed analyst projections, yet the market response was notably muted. Shares slipped 1% on Thursday, closing at $896.48, and showed little movement in subsequent trading.
Costco Wholesale Corporation, COST
The membership-based retailer reported earnings of $6.75 per share for the quarter that concluded on August 30. This figure exceeded the $6.54 consensus from analysts surveyed by FactSet.
Total revenue climbed 11% on a year-over-year basis to reach $95.72 billion, outpacing Wall Street’s expectation of $94.97 billion. Net sales, which constitute the majority of revenue, expanded to $93.87 billion compared to $84.43 billion in the same period last year.
Looking at the complete fiscal year, earnings advanced 14% to $20.78 per share. Total annual revenue grew 10% to $303.1 billion, also beating projections.
The company’s comparable sales increased 9.4% during the quarter. Domestic U.S. operations led with 11% growth, while international markets posted 7% growth and Canadian locations saw 5% gains.
E-commerce comparable sales surged nearly 20%. When excluding fluctuations from gasoline prices and foreign exchange rates, adjusted comparable store sales increased 6.7% across the organization.
Membership Revenue Decelerates
The expansion rate of membership fee revenue has now declined for three consecutive quarters, a development that hasn’t escaped analyst scrutiny. UBS analyst Michael Lasser acknowledged “solid profitability management” while highlighting the decelerating trend as a key investor focus going forward.
This represents a notable change from the pricing strength Costco has historically enjoyed. The company has maintained its iconic $1.50 hot dog and soda deal unchanged, and even reduced prices on multiple Kirkland Signature products in June.
Despite these price cuts, comparable store sales growth has remained robust, increasing 8.8% in June, 8.9% in July, and 8.4% in August. The company noted that August figures were slightly impacted by the timing of Labor Day.
Fuel Sales and Tariff Refunds Boost Results
CEO Ron Vachris highlighted gasoline sales as a standout performer. He explained that elevated prices stemming from the conflict in Iran drove more members to Costco’s fuel centers, which achieved record-breaking annual performance.
“Our gas business has had a record year, driven by members seeking value in Costco’s top tier gasoline in the face of rising prices,” Vachris told investors on Thursday’s call. He added that the share of U.S. member households buying gas from Costco hit an all-time high in fiscal 2026.
The quarter also benefited from tariff refunds. The retailer collected $184 million in refunds and directed a significant portion toward reducing prices on essential items including fresh produce, meat products, beverages, and select home goods.
CFO Gary Millerchip noted that this refund amount represents slightly more than one-third of what the company anticipates receiving in the current quarter. He emphasized that Costco intends to continue channeling the majority of these refunds into competitive pricing strategies.
“Our members continue to show resilience in their spending, and they show a willingness to spend in discretionary areas where they’re seeing exciting new items at great value,” Millerchip said.
Year-to-date, Costco’s stock has gained 4%, though it continues trading 18% beneath its 52-week closing high of $1,094.32, achieved in May. That previous peak preceded an earnings disappointment and membership growth concerns that rattled investor confidence.
During fiscal 2026, Costco launched 28 new warehouse locations, including three that were relocations of existing stores. The company has outlined plans to open 33 additional locations in fiscal 2027, with five being relocations, maintaining its strategic goal of approximately 30 net new warehouses annually.
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