Costco Posts a $95.7 Billion Quarter — and the Fine Print Is Better Than the Headline

Costco Wholesale sold $95.72 billion worth of bulk groceries, gasoline, and everything in between last quarter — beating Wall Street on both the top and bottom lines. But the number that matters most in Thursday's fiscal fourth-quarter report is the one Costco took back out: adjusted earnings of $6.60 a share, up 12.4% from a year ago, after stripping a one-time $0.15-a-share tariff-refund benefit. Even without the refund windfall, Costco grew double digits. The market's reaction said the rest: shares closed down 0.9% at $896.48 and were little changed after hours — the quiet treatment of a company priced for perfection.

The fine print makes the beat better, not worse

Start with the arithmetic, because this quarter's numbers come with an asterisk Costco itself drew. Reported net income was $2.998 billion, or $6.75 per diluted share, up from $2.61 billion ($5.87 a share) a year earlier. But that $6.75 includes a $0.15-a-share non-recurring benefit from tariff refunds received under the International Emergency Economic Powers Act, net of amounts already reinvested in price cuts for members. Take the benefit out and EPS was $6.60 — up 12.4% year over year — which beat every cited consensus anyway, including LSEG's $6.53. As CFO Gary Millerchip put it on the call: "Net income for the 4th quarter came in at $2.998 billion, or $6.75 per diluted share. This year's results include a non-recurring benefit of $0.15 per diluted share from IEEPA tariff refunds received in the quarter less partial reinvestment of those refunds in increased member values. … Excluding this nonrecurring benefit, net income and EPS were up 12.3% and 12.4%, respectively, from $2.61 billion or $5.87 per diluted share last year."

The refund story has legs. Costco received $184 million in tariff refunds plus interest in the fourth quarter — a little more than a third of what it expects in total — and has already banked a similar amount in the first quarter of fiscal 2027. Management's plan is not to pocket it. CEO Ron Vachris said the company "reinvested some of these dollars to give value back to our members. This was predominantly through price reductions on a number of items in the second half of the quarter, including everyday items in produce, meat, and beverages, and some non-food items such as home furnishings and hardware." A tariff windfall recycled into lower prices is about the most Costco thing imaginable — and it sets up a multi-quarter tailwind that flows straight into traffic.

The trade-down flywheel is spinning faster

The consumer story behind the beat is trade-down at warehouse scale. Comparable sales rose 9.4% company-wide — 11% in the U.S., 5% in Canada, 7% in other international markets — and 6.7% after adjusting for gasoline prices and foreign exchange. Comparable traffic grew 3.3%, and digitally enabled comparable sales surged 19.5%; full-year digital sales topped $33 billion, up 20.9%. Reuters' framing is worth repeating because it fits the data: shoppers feeling squeezed by high inflation are consolidating their trips, loading up on groceries and essentials in bulk in a single visit rather than making multiple smaller runs. Millerchip's read: "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."

The generational mix is shifting underneath all of it. Members under 40 are up nearly 60% since COVID and now make up more than a quarter of the base. Executive memberships hit a record 42.3 million, paid memberships reached 84.1 million (up 3.8%), and the worldwide renewal rate ticked up 10 basis points sequentially to 89.8%. Costco is also pushing delivery nationwide through Uber Eats and DoorDash — a digital on-ramp aimed squarely at those younger members — while insisting it is "mostly additive" to in-warehouse sales. The membership fee line itself printed $1.85 billion, up 7.3% — a genuine deceleration from the 14% growth of a year ago, which the bears will quote, but paired with improving renewals and record executive penetration, which the bulls will.

A record year at the gas pump

Then there is the gas station. With fuel prices soaring amid the Iran war, Costco's below-market pumps have become one of its most effective customer-acquisition machines. TD Cowen analyst Oliver Chen notes the stations usually sell below market value, pulling in price-sensitive customers — who then walk into the warehouse and fill a cart. Vachris was blunt on the call: "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," adding that the penetration of U.S. member households that bought gas reached an all-time high in fiscal 2026. Rising fuel prices hurt the economy; at Costco they hurt the competition.

The cost side cooperated, mostly. The gross margin rate was 11.02% — down 11 basis points year over year, but up 20 basis points once you strip out gas-price inflation, which mechanically dilutes the margin percentage. Net sales grew 11.2% to $93.87 billion; add the $1.85 billion in membership fees and you get the $95.72 billion total that beat all three cited consensus estimates ($94.82–94.97 billion).

The 40-times-earnings problem

So why did the stock fall? Because at roughly 40 times forward earnings, Costco is not priced for "good." It is priced for more than good. Zacks Investment Research's Bryan Hayes said it plainly: "This was a good quarter from an exceptionally well-run company. Traffic grew, renewal rates improved for a second straight quarter, core margins expanded and the store-opening pace is accelerating" — but "at roughly 40 times forward earnings, Costco is priced for more than 'good.'" Shares are up only about 4.9% this year against 12.6% for the S&P 500, and they sit well below last year's $1,096.50 high. After-hours trading barely moved.

The pattern is familiar: monthly sales reports leave few surprises, and the stock has fallen after 7 of its last 10 earnings reports. The market wants either a blowout or a cheaper multiple, and Costco keeps handing it neither — just quarter after quarter of compounding traffic, renewals, and warehouses. Fiscal 2026 closed with net income of $9.226 billion ($20.76 a share) on $297.2 billion of net sales. Boring excellence, expensively priced.

What to watch next

Three things will decide whether the next quarter gets a better reception. First, the tariff-refund tailwind: with a similar refund tranche already banked in fiscal Q1 and price cuts flowing through produce, meat, and beverages, watch whether traffic accelerates further. Second, the build: 28 warehouses opened in fiscal 2026 (net +25, to 939 total) with 33 planned for fiscal 2027 on roughly $7.5 billion of capital spending — the physical flywheel keeps turning. Third, the delivery experiment: Uber Eats and DoorDash rolling out nationwide will test whether digital growth can keep compounding at ~20% without cannibalizing the in-warehouse trip that makes the model work. If the answer is yes, the under-40 cohort Costco is quietly acquiring becomes the next decade's compounding engine.