Costco Wholesale (COST) Earnings Date & Reports

Key Takeaways

• Revenue reached a record $70.53 billion, up 11.6% year-over-year, surpassing the Zacks Consensus Estimate of $69.5 billion.
• Diluted earnings per share came in at $4.93, edging above the consensus estimate of $4.91 and rising 15.2% from $4.28 a year earlier.
• Headline comparable sales surged 9.8%, but the adjusted figure excluding gasoline prices and foreign exchange was a more modest 6.6%.
• Record gasoline volumes drove much of the top-line outperformance as consumers sought fuel savings amid elevated prices.
• Shares fell approximately 4% the day after the report, as a premium valuation and mixed underlying metrics tempered investor enthusiasm.
• Membership fee income grew 10.7% to $1.37 billion, with paid memberships reaching 82.9 million and executive memberships climbing 9.6%.

Earnings Context and Why It Matters

Costco's fiscal third-quarter results landed at a moment when investors are paying close attention to consumer spending resilience amid elevated gasoline prices, lingering tariff uncertainty, and broader macroeconomic caution. As the world's third-largest retailer by revenue, Costco serves as a bellwether for household budgets and discretionary purchasing patterns. The quarter's headline numbers showed robust demand, but the details revealed a more nuanced story: record gasoline volumes inflated the comparable sales figure, while adjusted growth metrics painted a steadier picture. With the stock trading at roughly 47 times forward earnings heading into the report, the market was demanding more than just a solid quarter — it needed a breakout. That high bar set the stage for a cautious reception.

Reported Results

Costco Wholesale Corporation reported total revenue of $70.53 billion for the 12 weeks ended May 10, 2026, representing an 11.6% increase from $63.21 billion in the same period last year. Net sales totaled $69.15 billion, while membership fee income reached $1.37 billion, up 10.7% year-over-year. Net income rose to $2.19 billion, up from $1.90 billion, yielding diluted earnings per share (EPS) of $4.93 compared to $4.28 a year ago.

On a comparable sales basis, the company posted a 9.8% increase worldwide. However, when adjusted to exclude the impact of gasoline price inflation and foreign exchange fluctuations, comparable sales grew 6.6%. The gap between these two figures reflects how meaningfully fuel prices boosted the headline number. Regionally, the U.S. posted adjusted comparable sales growth of 6.8%, Canada delivered 6.2%, and Other International markets contributed 5.9%. Digitally enabled comparable sales continued their strong run, surging 21.5% on a reported basis, or 20.8% adjusted for foreign exchange.

Gross margin contracted 21 basis points year-over-year to 11.04%, pressured by strategic price investments in fresh foods and higher transportation costs tied to fuel prices. Excluding gasoline inflation, gross margin improved by one basis point. Selling, general, and administrative (SG&A) expenses as a percentage of sales improved modestly. Operating income grew 11.3% to $2.82 billion.

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Market Reaction and Investor Sentiment

Despite the headline revenue record, Costco shares declined approximately 4% in the trading session following the earnings release on May 28, 2026. The muted response reflected several investor concerns. First, the adjusted comparable sales figure of 6.6% landed in the middle of the company's recent historical range, neither disappointing nor impressing. Second, the slight EPS beat was viewed as low-quality given how heavily gasoline price inflation contributed to the top line. Third, Costco's elevated valuation — hovering near all-time highs at roughly 47 times forward earnings — meant that anything short of a standout quarter was unlikely to generate significant upside momentum. Broader market sentiment around tariff-related uncertainty also weighed on the stock, as management acknowledged that the timeline for IEEPA (International Emergency Economic Powers Act) tariff refunds remained dependent on regulatory processes and litigation outcomes.

Forward Outlook and Key Factors to Monitor

Looking ahead, Costco's fiscal fourth-quarter results, expected in late September 2026, will be closely scrutinized for signs of sustainable demand beyond the gasoline-driven boost seen in Q3. Analysts currently project Q4 EPS of approximately $6.43 to $6.55, which would represent notable growth from $5.87 in the prior-year quarter. Several factors are likely to shape the narrative in the months ahead.

Warehouse expansion remains a central growth pillar. Costco opened four net new locations during the third quarter and now expects to add 26 net new warehouses in fiscal 2026, with plans to accelerate to 30-plus annually in subsequent years. Each new opening represents an incremental driver of membership fee income and sales volume, particularly in international markets such as China, where the company recently launched its executive membership program.

Margin dynamics will also stay in focus. While Costco continues to invest in price reductions on everyday essentials — consistent with its philosophy of being "the first to lower prices and the last to raise them" — higher transportation costs and potential tariff-related expenses could keep gross margins under modest pressure. On the digital front, e-commerce momentum remains strong, with site and app traffic up 37% and AI-powered personalized recommendations generating meaningfully higher conversion rates.

The potential return of IEEPA tariff refunds represents a wildcard. Costco has begun submitting refund claims through U.S. Customs and Border Protection, and any approved reimbursements could flow back to members or bolster financial results, though the amount and timing remain uncertain. Investors should also monitor membership renewal rates, which held steady at 92.2% in the U.S. and Canada, and the trajectory of executive membership growth, which now accounts for roughly 75% of worldwide sales.

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