Costco Wholesale Corporation
COST · Nasdaq
Aug 2026
Next quarter
Reports Sep 24, 2026, after the close.
Consensus is $6.48 EPS for Aug 2026 across 11 estimates, ranging $6.28 to $6.71.
COST May 2026
- -3.91%
- —
- $4.93
- —
- $70.53B
Reported results
- $70.53B
- $2.81B
- $2.19B
- $4.93
Highlights
- Earnings: Costco reported diluted EPS of $4.93, matching the supplied $4.93 expectation, versus $4.28 a year ago and $4.58 in Q2 FY2026.
- Revenue: Total revenue rose 11.6% year over year to $70.53 billion, up from $69.60 billion in the prior quarter and $63.21 billion a year ago.
- Comparable sales: Company-wide comparable sales increased 9.8%, or 6.6% excluding gasoline-price and foreign-exchange effects; digitally enabled comparable sales rose 21.5%.
- Membership: Membership-fee revenue grew 11% to $1.37 billion; paid members reached 82.9 million versus 79.6 million a year ago, while worldwide renewal was 89.7%.
- Profitability: Operating income increased 11.3% to $2.82 billion, while net income rose 15.2% to $2.19 billion; the effective tax rate fell to 25.4% from 26.2%.
- Sales drivers: Higher gasoline prices added $1.37 billion, or 221 basis points, to net sales growth, while foreign exchange added approximately $643 million, or 104 basis points.
- International growth: Revenue increased 11% in the U.S. to $51.43 billion, 13% in Canada to $9.41 billion, and 13% in Other International to $9.68 billion; international operating income rose 12% in Canada and 19% in Other International.
- Cash and investment: Year-to-date operating cash flow rose to $11.13 billion from $9.47 billion, while cash and short-term investments reached $20.00 billion at May 10, 2026.
- Expansion: Costco opened four warehouses during the quarter and 16 during the first 36 weeks; it spent $4.23 billion on capital expenditures year to date and plans approximately $6.50 billion for FY2026.
Analysis
Costco’s fiscal Q3 was a broad-based growth quarter, with EPS of $4.93 matching the supplied expectation. Total revenue reached $70.53 billion, up 11.6% from $63.21 billion a year ago and 1.3% from $69.60 billion in Q2 FY2026. Operating income rose 11.3% year over year to $2.82 billion, while net income increased 15.2% to $2.19 billion. Sequentially, operating income increased from $2.61 billion, net income from $2.04 billion, and EPS from $4.58.
The core of the print was sustained traffic and member spending: comparable sales grew 9.8%, driven by a 7% increase in average ticket and 2% higher shopping frequency. Underlying comparable growth was 6.6% excluding gasoline and foreign exchange, while digitally enabled comparable sales accelerated 21.5%. Membership remained an important profit contributor, with fee revenue up 11% to $1.37 billion and paid members up 4.1% to 82.9 million. Margin performance was mixed but controlled: reported gross margin declined 21 basis points because of gasoline-price inflation, while gross margin excluding that effect improved one basis point and adjusted SG&A leverage improved two basis points. Higher gasoline prices and favorable currency translation materially lifted reported sales, making the underlying 6.6% comparable-sales result the more useful read on demand.
Comparable sales momentum
- Underlying demand: Total comparable sales increased 9.8%, with average ticket up approximately 7% and shopping frequency up 2%. Excluding gasoline-price and foreign-exchange effects, comparable sales rose 6.6%.
- Digital growth: Digitally enabled comparable sales increased 21.5%, or 20.8% on the company’s adjusted measure and 21% excluding foreign exchange.
- Category mix: Core merchandise sales grew 7% to $53.74 billion, including Foods and Sundries up 5.5% to $26.53 billion, Non-Foods up 9.0% to $17.53 billion, and Fresh Foods up 10.1% to $9.67 billion. Warehouse ancillary and other businesses rose 29% to $15.42 billion, led by gasoline and pharmacy.
- External contributions: Higher gasoline prices added $1.37 billion, or 221 basis points, to net sales growth, while foreign exchange added approximately $643 million, or 104 basis points. Gasoline volume also increased about 10%, contributing $662 million of sales growth.
Membership economics
- Fee revenue: Membership-fee revenue increased 11% to $1.37 billion from $1.24 billion, driven by new sign-ups, fee increases, and Executive Membership upgrades. Fee increases accounted for approximately 25% of membership-income growth in the quarter.
- Member base: Paid members reached 82.9 million, up from 79.6 million a year ago, while total cardholders rose to 148.5 million from 142.8 million.
- Retention: Renewal rates were 92.2% in the U.S. and Canada and 89.7% worldwide. Management said the worldwide rate was affected by a greater proportion of online and digitally promoted memberships, which renew at slightly lower rates.
Margin and earnings
- Gross margin: Gross margin dollars increased to $7.64 billion from $6.97 billion, but gross margin rate fell to 11.04% from 11.25% because higher gasoline prices increased the sales denominator. Excluding gasoline-price inflation, the rate improved one basis point to 11.26%.
- Merchandise pressure: Core merchandise gross margin rate declined 29 basis points, mainly in Foods and Sundries and Fresh Foods, partly offset by Non-Foods and the co-branded credit-card program.
- Expense leverage: SG&A increased to $6.19 billion from $5.68 billion, but declined to 8.96% of sales from 9.16%. Excluding gasoline-price inflation, SG&A leverage improved two basis points.
- Bottom line: Operating income rose to $2.82 billion from $2.53 billion, and net income increased to $2.19 billion from $1.90 billion. A lower 25.4% effective tax rate, versus 26.2%, provided an additional benefit.
Geographic expansion
- United States: Revenue increased 11% to $51.43 billion and operating income rose 9% to $1.87 billion. U.S. comparable sales increased 9.4%, or 6.8% adjusted for gasoline and foreign exchange.
- Canada: Revenue grew 13% to $9.41 billion and operating income increased 12% to $506 million. Comparable sales rose 10.7%, or 6.2% adjusted.
- Other International: Revenue rose 13% to $9.68 billion and operating income increased 19% to $436 million. Comparable sales increased 11.2%, or 5.9% adjusted.
- Warehouse base: Costco opened four warehouses in the quarter, including three in the U.S. and one in Canada, and operated 931 warehouses at the time of the release. Management plans 13 additional openings in the remainder of FY2026.
Cash and capital allocation
- Operating cash flow: Cash provided by operations for the first 36 weeks increased to $11.13 billion from $9.47 billion, helped by higher operating income, faster inventory turns, and improved supplier payment terms.
- Investment: Year-to-date capital expenditures were $4.23 billion, compared with $3.53 billion a year ago. The company intends to spend approximately $6.50 billion in FY2026 on warehouses, remodels, depots, systems, and digitally enabled businesses.
- Balance sheet: Cash and cash equivalents were $18.95 billion and short-term investments were $1.05 billion at May 10, 2026, compared with combined liquidity of $15.28 billion at August 31, 2025. Long-term debt excluding the current portion was $5.67 billion.
- Returns: Costco repurchased $603 million of stock during the first 36 weeks at an average price of $945.46 per share, paid $1.15 billion in cash dividends, and declared a quarterly dividend of $1.47 per share.
