Costco earnings top forecasts, US sales rose 6% as consumers weigh value push, tariff pressures

Costco (COST) reported fourth quarter earnings after market close on Thursday that slightly beat Wall Street’s expectations as it navigated a choppy consumer landscape, tariff-related pressure, and competition from peers like Walmart’s (WMT) Sam’s Club.

For the quarter, revenue at the wholesale giant clocked in at $86.16 billion, compared to expectations of $86.03 billion, with adjusted earnings per share coming in at $5.87, higher than the forecasted $5.82, per Bloomberg consensus estimates.

Same-store sales grew 6.4%, slightly higher than the 6.2% growth expected.

US same-store sales were up 6%, slightly lower than the 6.1% predicted, while sales in Canada grew the most, up 8.3%, higher than the 6.8% jump analysts predicted. Other international markets sales were up 7.2%, in line with the 7.2% estimated. Walmart’s Sam’s Club posted same-store sales growth of 5.9% in its latest results.

Annual revenue for Costco’s fiscal 2025 tallied $275.24 billion, with adjusted earnings per share of $18.21, higher than the $18.10 the Street estimated, according to Bloomberg data. Same-store sales beat too, at 7.6% growth, compared to the 7.5% anticipated.

In times of economic uncertainty, “everyday value items” are “extremely important,” CFO Gary Millerchip said on an earnings call.

“There are no better examples of this than our hotdog combo, rotisserie chicken, and [private label Kirkland Signature] bath tissue,” he said.

In fiscal year 2025, Millerchip boasted the company sold over 245 million hot dog combos, over 157 million rotisserie chickens, and enough bath tissue “to reach the moon and back over 200 times.”

Newness and value resonated with customers, Millerchip said, but they “remain very choiceful in their spending on discretionary items.”

Costco stock fell about 0.8% in extended trading following the results.

Year to date, Costco stock has been a laggard, with shares up about 2.5% against the S&P 500’s (^GSPC) 13.5% gain.

Oppenheimer analyst Rupesh Parikh views Costco’s long-term prospects “very favorably” as the company leans into its value proposition, global growth, and consistent track record of returns for shareholders. Parikh added that its management team has the “potential for sustainable top and bottom-line delivery even against a more competitive retail backdrop.”

Costco grew membership fee income by 14% from a year ago to $1.72 billion, with total cardholders up 6.1%.

The analyst notes that during the most recent quarter, Amazon rolled out its same-day delivery initiative, and since then, Costco’s stock — alongside BJ’s (BJ), Dollar General (DG), Dollar Tree (DLTR), and Kroger (KR) — has underperformed.

“We’re very aware of new competition into this space, and we continue to watch that very closely,” CEO Ron Vachris said on the call.

Costco partnered with Uber Eats and Instacart for same-day delivery in recent years, which he said is growing at a “good rate” and continues to be a “very good business.”

Moving forward, online sales will be included in its e-commerce same-store sales growth, which grew 15% this past quarter.

As retailers navigate tariffs, Evercore ISI analyst Greg Melich believes Costco’s position in the market helps.

“We believe Costco is well positioned to win share and leverage scale and supply chain strengths to navigate tariff impacts amidst a choppy consumer backdrop,” he wrote.

Millerchip told investors this quarter that the company worked closely with suppliers to mitigate tariff impact, including swapping the countries it produces in, consolidating its buying efforts globally to lower the cost of goods, and changing item assortment “where appropriate.”

For example, the company increased domestically sourced goods and leaned into “health and beauty, live goods, tires, and mattresses.”

Heading into the holiday season, he said “product mix will look a little different from years past,” adding that its buyers “really had to evaluate all the discretionary items,” like toys and decorations, while making decisions on “necessities” like Christmas trees.

Without overinvestment there, the company said it was able to lean into higher-ticket goods in “new categories” like in-home saunas and furniture that weren’t available before “due to space limitations.”