Digital Sales and Member Loyalty Drive Costco as Expansion Spending Accelerates

Costco's Core Business Keeps Growing

Costco Wholesale (COST) shares moved higher after fiscal fourth-quarter results showed continued sales growth, strong digital activity and improving renewal rates. Earnings reached $6.75 per diluted share, while revenue rose to $95.72 billion.

The quarter also included a $0.15-per-share benefit from tariff refunds, part of which Costco reinvested into lower prices. Excluding that benefit, earnings were approximately $6.60 per share. Adjusted comparable sales increased 6.7%, while digitally enabled comparable sales rose 19.8%.

Key Points

• Costco reported fiscal Q4 earnings of $6.75 per share and revenue of $95.72 billion, both above Wall Street expectations.
• Adjusted comparable sales increased 6.7% and digitally enabled comparable sales rose 19.8%, while renewal rates improved sequentially.
• Costco plans approximately $7.5 billion of fiscal 2027 capital spending and 33 warehouse openings, including five relocations.

Strong Sales and Digital Growth Support Costco's Quarter

Costco's fourth-quarter net income increased to $2.998 billion from $2.610 billion a year earlier, while diluted earnings per share rose to $6.75 from $5.87. Revenue increased 11% to $95.72 billion.

The quarter benefited from $184 million of tariff refunds. After Costco reinvested part of those refunds into lower member prices, the net benefit added $0.15 per diluted share. Excluding that benefit, earnings were approximately $6.60 per share.

Comparable sales remained strong. Total company comparable sales increased 9.4%, including growth of 10.7% in the U.S., 5% in Canada and 7% across other international markets. Adjusting for fuel prices and currency movements, companywide comparable sales increased 6.7%.

Digital growth was considerably faster. Digitally enabled comparable sales increased 19.8% on an adjusted basis, while site and app traffic rose 30%. Digitally enabled sales exceeded $33 billion for fiscal 2026.

Other parts of the business also contributed. Worldwide traffic increased 3.3%, ancillary comparable sales grew by the high-20s, pharmacy sales increased nearly 20% for the fiscal year and travel recorded double-digit growth.

Why Did Costco Stock Move Higher?

Costco shares rose about 2.5% Friday after closing Thursday at $896.48, as the market responded to results that exceeded earnings and revenue expectations alongside continued comparable-sales growth.

Underlying profitability also provided additional context. Reported gross margin declined 11 basis points, but increased 20 basis points excluding gasoline inflation. Core margin on Costco's own sales increased 18 basis points after excluding tariff refunds and the associated price reinvestment, while selling, general and administrative expenses improved by 2 basis points excluding gasoline.

The quarter nevertheless showed some cost pressure. Gross profit margin declined to 11.01% from 11.12% a year earlier, while management said inflation was running in the low single digits. Non-food categories experienced greater pressure, particularly from higher memory costs affecting consumer electronics and petroleum-related costs.

Costco also recorded a $152 million LIFO charge tied to late-year memory and petroleum-related inflation and a full-year accounting adjustment.

Membership trends were more mixed. Fee income increased 7.3% to $1.849 billion, and Executive memberships rose 9.4% to 42.3 million. Renewal rates improved by 10 basis points sequentially to 92.3% in the U.S. and Canada and 89.8% worldwide.

Total paid memberships, however, increased 3.8%, marking an eighth consecutive quarter of decelerating growth.

Costco's $7.5 Billion Expansion Plan Becomes the Next Test

Costco is preparing to increase capital spending as it expands its warehouse, supply-chain and e-commerce capacity.

Fiscal 2027 capital expenditures are planned at approximately $7.5 billion, up from $6.4 billion in fiscal 2026. Costco expects 33 warehouse openings during the year, including five relocations. The company finished fiscal 2026 with 939 warehouses.

The investment follows another year of companywide growth. Full-year net sales increased 10.1% to $297.2 billion, while net income reached $9.226 billion, or $20.76 per diluted share, compared with $8.099 billion, or $18.21 per share, a year earlier.

Costco is also expanding beyond its warehouses. The company is broadening delivery relationships with Uber Eats and DoorDash across the U.S., and management said sales through those channels have been mostly incremental rather than replacing warehouse revenue.

Tariff refunds will remain another factor in upcoming results. Costco received $184 million during the fourth quarter and a similar amount early in the first quarter. Management said the payments received represented only slightly more than one-third of the refunds it expects to collect during the fiscal first quarter and plans to direct most of the proceeds back into lower prices.

What It Means for Investors

Costco's fourth-quarter results showed several parts of its operating model moving in the same direction: comparable sales continued growing, digital activity expanded rapidly, Executive memberships increased and renewal rates improved.

The earnings result also requires context. The $6.75 reported figure included a $0.15 benefit from tariff refunds, putting earnings at approximately $6.60 when that benefit is excluded. Costco is using much of the refund proceeds to lower prices rather than retaining the entire benefit.

Membership growth presents a different signal. Fee income and Executive memberships increased, and renewal rates improved, but total paid-membership growth slowed for an eighth consecutive quarter.

Fiscal 2027 adds another variable as capital spending rises to approximately $7.5 billion. With 33 planned openings and additional investment in supply-chain and e-commerce capacity, the pace of sales, membership and digital growth will provide context for how that larger capital program develops.

Conclusion

Costco's fiscal fourth quarter combined higher revenue and earnings with continued comparable-sales growth and particularly strong digital activity.

The retailer also maintained high renewal rates and expanded its Executive membership base, even as overall paid-membership growth continued to decelerate. Meanwhile, tariff refunds provided a temporary earnings benefit that Costco is largely redirecting toward lower prices.

Attention now shifts toward fiscal 2027, when Costco plans to increase capital spending to approximately $7.5 billion while opening 33 warehouses and expanding its supply-chain and e-commerce infrastructure.

FAQs

How did Costco perform in fiscal Q4 2026?

Costco reported revenue of $95.72 billion and diluted earnings of $6.75 per share. Net income reached $2.998 billion, compared with $2.610 billion in the year-earlier period.

How much did tariff refunds contribute to Costco's earnings?

Tariff refunds provided a net benefit of $0.15 per diluted share during the quarter after Costco reinvested part of the proceeds into lower prices for members.

How fast are Costco's digital sales growing?

Digitally enabled comparable sales increased 19.8% on an adjusted basis during the fourth quarter, while site and app traffic increased 30%. Digitally enabled sales exceeded $33 billion for fiscal 2026.

What is happening with Costco's membership growth?

Membership fee income increased 7.3% to $1.849 billion and Executive memberships rose 9.4% to 42.3 million. Total paid memberships increased 3.8%, marking an eighth consecutive quarter of decelerating growth.

How much will Costco invest in fiscal 2027?

Costco plans approximately $7.5 billion in fiscal 2027 capital expenditures, compared with $6.4 billion in fiscal 2026. The company expects 33 warehouse openings, including five relocations.

This article was created with AI assistance and reviewed by an editor. For details, please refer to our Terms of Use.

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