COSTCO WHOLESALE CORP /NEW (COST) Q4 2025 Earnings Summary

Executive Summary

Q4 FY2025 delivered solid growth and modest beats vs consensus: net sales $84.432B (+8.0% YoY) and diluted EPS $5.87; EPS beat by $0.07 and revenue beat by $0.09B versus S&P Global Wall Street consensus estimates (EPS $5.80*, revenue $86.06B*) . Values retrieved from S&P Global*.
Core merchandising drove margin expansion: gross margin 11.13% (+13 bps YoY; +3 bps ex gas), while SG&A rose to 9.21% (+17 bps YoY), reflecting wage investments and higher liability reserves; LIFO charge was $43M, broadly in line with Q3 commentary .
Membership strength continued: membership fee income $1.724B (+14.0% YoY), paid memberships 81.0MM (+6.3%), executive memberships 38.7MM; renewal rates remained high but declined modestly (US/Canada 92.3%, worldwide 89.8%) due to higher digital sign‑ups mix .
Strategic actions: plan to open 35 warehouses in FY2026; CapEx expected to grow vs FY2025 and run slightly above sales growth, with investments in remodels, depots, logistics, manufacturing (hot dogs, coffee roasting), and front‑end technology .
Near‑term narrative drivers: tariff management (multi‑pronged mitigation), definitional change to “digitally enabled” comparable sales reporting starting with September release, and continued e‑commerce/logistics momentum .

What Went Well and What Went Wrong

What Went Well

Membership engine: fee income +14.0% YoY; upgrades accelerated post new executive benefits and extended hours; executive sales penetration 74.2% . Quote: “We have recently seen a lift in upgrades in the U.S. after we announced our executive member exclusive hours and other benefits” .
Margin resilience despite tariffs: core-on-core margins +29 bps; broad-based improvement across fresh, food & sundries, and non-foods, aided by supply-chain efficiencies and higher Kirkland penetration . Quote: “We… believe our expertise in buying and the flexibility afforded by our limited SKU count give us greater agility to navigate the current environment” .
Digital traction: e‑comm comps +13.6% (+13.5% ex-FX); site traffic +27%; Costco Logistics deliveries +13% QoQ with 15th consecutive quarter of improved experience scores .

What Went Wrong

SG&A deleverage: SG&A rate 9.21% (+17 bps YoY; +9 bps ex gas) driven by wage investments and ~5 bps hit from general liability charges/reserves .
LIFO headwind: Q4 LIFO charge $43M (vs $8M credit last year), reflecting low-to-mid single-digit inflation, especially imported non‑foods .
Renewal rate mix headwind: US/Canada renewal rate 92.3% and worldwide 89.8% declined modestly due to higher share of lower‑renewing online sign‑ups (including prior Groupon cohort entering the calculation) .

Financial Results

Quarterly P&L comparison (oldest → newest)

Metric	Q2 2025	Q3 2025	Q4 2025
Net Sales ($USD Billions)	$62.530	$61.965	$84.432
Membership Fees ($USD Billions)	$1.193	$1.240	$1.724
Total Revenue ($USD Billions)	$63.723	$63.205	$86.156
Operating Income ($USD Billions)	$2.316	$2.530	$3.341
Net Income ($USD Billions)	$1.788	$1.903	$2.610
Diluted EPS ($USD)	$4.02	$4.28	$5.87
Gross Margin (%)	10.85%	11.25%	11.13%
SG&A (%)	9.06%	9.16%	9.21%

Notes: Q4 YoY EPS growth +11% reported; +14% excluding last year’s tax benefit .

Q4 Comparable Sales by Geography

Region	Reported Comparable Sales (%)	Adjusted Comparable Sales (%)
U.S.	5.1%	6.0%
Canada	6.3%	8.3%
Other International	8.6%	7.2%
Total Company	5.7%	6.4%
E‑commerce	13.6%	13.5%

Q4 Operating KPIs

KPI	Q4 2025
Membership Fee Income ($USD Billions)	$1.724
Membership Fee Income Growth YoY (%)	+14.0%
Paid Memberships (MM)	81.0
Total Cardholders (MM)	145.2
Executive Memberships (MM)	38.7
Executive Sales Penetration (%)	74.2%
Renewal Rate – US/Canada (%)	92.3%
Renewal Rate – Worldwide (%)	89.8%
Q4 LIFO Charge ($USD Millions)	$43
Q4 Tax Rate (%)	25.6%

Actuals vs Wall Street Consensus (S&P Global)

Metric	Q3 2025	Q4 2025
EPS Estimate* ($)	4.2434*	5.80216*
EPS Actual ($)	4.28	5.87
Revenue Estimate* ($USD Billions)	$63.097*	$86.057*
Revenue Actual ($USD Billions)	$63.205	$86.156

Values retrieved from S&P Global*. Beat/miss: Q3 EPS +$0.04, revenue +$0.11B; Q4 EPS +$0.07, revenue +$0.10B.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Dividend per Share	Ongoing (declared)	$1.16 quarterly before Apr 2025	$1.30 quarterly (raised Apr 16, 2025; declared July 16, 2025)	Raised
Warehouse Openings	FY2026	N/A	Plan to open 35 warehouses (incl. 5 relocations)	New disclosure
Capital Expenditure	FY2026	FY2025 CapEx “a little under $5.5B”	FY2026 CapEx expected to grow vs FY2025 and run slightly higher than sales growth; specific number to be provided in Q1	Raised (directional)
E‑commerce Reporting Definition	Starting Sept 2025 monthly sales	E‑comm comparable sales	Shift to “digitally enabled” comparable sales (includes Instacart/Uber/DoorDash, Travel, Business Center Delivery, direct‑to‑member)	Methodology change

Note: Costco does not provide formal revenue/EPS guidance; management provides directional commentary on CapEx, expansion, and reporting methodology .

Earnings Call Themes & Trends

Topic	Q2 2025 (Mar 6)	Q3 2025 (May 29)	Q4 2025 (Sep 25)	Trend
AI/Technology & Front‑End	Digital enhancements; Affirm BNPL partnership launched; e‑comm comps +20.9%	Personalization (recommendation hub), targeted campaigns; e‑comm comps +14.8%; logistics deliveries +31%	Enhanced checkout tech scanning in‑line; passwordless mobile sign‑in; waiting rooms for hot items; site personalization	Steady build of member‑centric tech; operational throughput gains
Supply Chain	Stable; depot/logistics investments continuing (implied)	Stable; shipping covered by contracts; focus on efficiency	“No major changes” since Q3; inventory positioned for holidays	Stable; efficiency leverage supporting margins
Tariffs/Macro	Commitment to value; early mitigations (mix, sourcing)	Multi‑pronged mitigation (global buying, re‑sourcing, assortment rotation); LIFO $130M true‑up; non‑foods inflation returning	Offensive posture (“last up, first down” on price); continued mitigation; LIFO $43M; inflation low‑to‑mid singles	Sustained mitigation; modest inflation headwind
Product Performance	Fresh strong; reductions on butter/eggs; non‑foods momentum	Fresh high single‑digit comps (meat strong); non‑foods high single digits; bullion/gift card lapping	Fresh high single‑digit comps; strong growth in gold/jewelry, majors, toys, men’s apparel; strategic holiday assortment shifts	Healthy core demand; curated discretionary mix
Regional Trends	Adjusted comps broad‑based; US +8.6% adj	US +7.9% adj; Canada +7.8% adj; Other Intl +8.5% adj	US +6.0% adj; Canada +8.3% adj; Other Intl +7.2% adj	Balanced; Canada/Intl solid; US steady
Membership	Renewal rates >90%; fee income growth +7.4%; exec sales penetration ~73.8%	Paid memberships 79.6MM; exec memberships 37.6MM; renewal rate mix effects from digital cohorts	Paid memberships 81.0MM; exec sales penetration 74.2%; renewal rates US/CN 92.3%, worldwide 89.8%	Growth intact; modest renewal rate mix pressure
Reporting Methodology	—	—	Moving to “digitally enabled comps” beginning Sept	Broader disclosure aligning with peers

Management Commentary

“We estimate these incremental [Executive Member] hours have added about 1% to weekly U.S. sales since implementation.” – CEO Ron Vachris .
“Core‑on‑core margins were higher by 29 bps… supply chain improvements and increased Kirkland Signature penetration benefited margins.” – CFO Gary Millerchip .
“We are going to be the last one to go up and always the first one to go down [on price].” – CEO Ron Vachris on tariffs posture .
“For fiscal year 2025, our digitally enabled sales total more than $27 billion.” – CFO Gary Millerchip .
“We plan to open another 35 warehouses in fiscal year 2026… we continue to see significant opportunities for expansion.” – CEO Ron Vachris .

Q&A Highlights

Extended hours: Management quantified ~1% U.S. weekly sales lift; operators minimized SG&A impact; continued communication to drive awareness .
Renewal rates: Expected modest declines to persist due to digital sign‑up mix; focus on auto‑renewal and targeted digital communications to improve cohort renewal .
Margins & inflation: Non‑foods inflation low single digits driving LIFO; fresh margin tailwinds from lower spoilage and labor efficiencies; continued mitigation of tariff impacts .
E‑commerce reporting shift: Starting September, comps will reflect “digitally enabled” sales including third‑party same‑day platforms and Travel .
CapEx & unit growth: CapEx expected to grow in FY2026 vs FY2025; strategy includes remodels, depots, manufacturing, and technology; sustainable runway for ~30 openings/year, with cannibalization benefits to relieve high‑volume warehouses .

Estimates Context

Q4 FY2025: EPS $5.87 vs consensus $5.80* (+$0.07 beat); revenue $86.156B vs consensus $86.057B* (+$0.10B beat). Drivers: core margin expansion (+29 bps), strong membership income, e‑commerce growth; offsets from SG&A deleverage (+17 bps) and LIFO ($43M) . Values retrieved from S&P Global*.
Q3 FY2025: EPS $4.28 vs consensus $4.24* (+$0.04 beat); revenue $63.205B vs consensus $63.097B* (+$0.11B beat). Mix benefits and fresh margins offset wage and LIFO headwinds . Values retrieved from S&P Global*.
Potential estimate updates: Continued tariff mitigation and executive benefits may support revenue/margin trajectories; definitional change to digitally enabled comps could expand perceived digital growth; watch renewal rate mix impact on membership income assumptions .

Key Takeaways for Investors

Near‑term: Solid operational execution and price leadership underpin modest beats; tariff mitigation posture suggests Costco may widen value gaps versus peers, a potential multiple support catalyst .
Membership durability: Despite small renewal rate mix headwinds, membership base and fee income remain strong; executive upgrades accelerating post benefits and hours .
Margin cadence: Expect continued focus on operational productivity (fresh spoilage, labor) to fund price investments; monitor LIFO/FX variability and gas margins .
CapEx/Expansion: FY2026 CapEx to grow vs FY2025 and above sales growth; 35 planned openings provide multi‑year unit growth visibility, with cannibalization improving member experience in high‑volume markets .
Digital/logistics: Digitally enabled comps reporting broadens scope; logistics scale and front‑end tech enhancements support throughput and big‑and‑bulky share gains .
Holiday assortment: Shift towards relevant high‑ticket seasonal items (sheds, saunas, furniture) given space constraints; curated discretionary mix aims to sustain non‑foods momentum .
Dividend support: Quarterly dividend raised to $1.30 in April and reaffirmed in July, evidencing capital return discipline amid growth investments .