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COST Q4 Earnings Beat Estimates on Sales and Digital Strength
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Key Takeaways
Costco's Q4 adjusted EPS rose 12.4% to $6.60, while revenues climbed 11.1% to $95.72 billion.
COST comparable sales rose 9.4%, supported by a 3.3% traffic gain and a 5.9% higher average ticket.
Costco's digitally enabled comparable sales jumped 19.5%, with site and app traffic climbing 30%.
Costco Wholesale Corporation (COST - Free Report) reported fourth-quarter fiscal 2026 adjusted earnings of $6.60 per share, which beat the Zacks Consensus Estimate of $6.48 and increased 12.4% year over year. Reported earnings came in at $6.75 per share, including a 15-cent nonrecurring benefit related to tariff refunds.
Total revenues rose 11.1% year over year to $95,723 million, surpassing the consensus estimate of $94,820 million. Comparable sales increased 9.4%, while digitally enabled comparable sales advanced 19.5%.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Net sales improved 11.2% year over year to $93,873 million. Comparable sales growth was supported by a 3.3% increase in worldwide traffic and a 5.9% rise in average ticket.
Excluding gasoline price and foreign exchange impacts, comparable sales increased 6.7%, with both adjusted ticket and traffic growth of 3.3%. Gas price inflation contributed about three percentage points to reported sales growth, while foreign exchange had a roughly 0.3% negative impact.
Costco Sees Broad Regional Sales Gains
Comparable sales in the United States increased 10.7%, while Canada and Other International markets registered gains of 5% and 7%, respectively. On an adjusted basis, comparable sales grew 7.2% in the United States, 4.6% in Canada and 6.2% in Other International markets.
Nonfoods delivered mid-to-high-single-digit comparable sales growth, led by gold and jewelry, home furnishings, housewares, small electrics, and health and beauty. Fresh foods recorded mid-single-digit comparable sales growth, driven by bakery and meat, while food and sundries posted low-to-mid-single-digit gains.
COST’s Membership Trends Remain Healthy
Membership fee income increased 7.3% year over year to $1,849 million and rose 7.7%, excluding foreign exchange effects. Excluding foreign exchange and the September 2024 membership fee increase, membership income advanced 6.8%, driven by higher executive membership penetration and membership growth.
Costco ended the quarter with 84.1 million paid members, up 3.8%, and 150.4 million cardholders, up 3.6%. Paid executive memberships increased 9.4% to 42.3 million. U.S. and Canada renewal rates improved 10 basis points sequentially to 92.3%, while the worldwide rate reached 89.8%.
Costco's Digital Business Maintains Momentum
Digitally enabled comparable sales increased 19.5%, or 19.8% excluding foreign exchange impacts. Site and app traffic climbed 30%, with pharmacy, home furnishings, small electrics, hardware, housewares, domestics, and health and beauty among the strongest digital categories.
Costco expanded third-party same-day delivery through Uber Eats and DoorDash in the United States alongside its Instacart partnership. Management said digitally enabled sales exceeded $33 billion in fiscal 2026 and grew more than 20%.
COST's Margins Reflect Gas and Tariff Effects
Gross margin contracted 11 basis points year over year to 11%. Excluding gasoline inflation, however, gross margin improved 20 basis points. Core-on-core margins on their own sales increased 18 basis points after excluding tariff refund effects, helped by supply-chain efficiencies and improved fresh-food labor productivity.
The SG&A rate improved 27 basis points to 8.9%, though the improvement narrowed to two basis points, excluding gasoline inflation. Operating income increased 13.8% year over year to $3,801 million.
Costco Expands Warehouses and Investment
Costco ended fiscal 2026 with 939 warehouses after opening 25 net new locations during the year. Management plans 33 openings in fiscal 2027, including five relocations, for a net 28 new warehouses.
Cash and cash equivalents stood at $20,207 million at fiscal year-end, up from $14,161 million a year earlier. Fiscal 2026 operating cash flow increased to $15,825 million from $13,335 million, while additions to property and equipment totaled $6,435 million. Costco plans approximately $7.5 billion in capital expenditures for fiscal 2027, primarily supporting warehouse growth and supply-chain investments.
Shares of this Zacks Rank #3 (Hold) company have fallen 5.9% over the past three months compared with the industry’s decline of 4.8%.
The Zacks Consensus Estimate for Target’s current financial-year sales and earnings indicates growth of 5.1% and 37.8%, respectively, from the prior-year reported levels. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.
Ross Stores, Inc. (ROST - Free Report) is one of the largest off-price apparel and home fashion chains in the United States. ROST carries a Zacks Rank #2.
The consensus estimate for Ross Stores’ current fiscal-year sales and earnings per share implies growth of 12.4% and 32.7%, respectively, from the year-ago reported figures. ROST delivered a trailing four-quarter earnings surprise of 11.2%, on average.
Dollar General Corporation (DG - Free Report) , a discount retailer, currently carries a Zacks Rank #2. DG delivered a trailing four-quarter earnings surprise of 19.1%, on average.
The Zacks Consensus Estimate for Dollar General's current fiscal-year sales and earnings calls for growth of 4.2% and 15.2%, respectively, from the year-ago reported figures.
View the Zacks #1 Rank List
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COST Q4 Earnings Beat Estimates on Sales and Digital Strength
Key Takeaways
Costco Wholesale Corporation (COST - Free Report) reported fourth-quarter fiscal 2026 adjusted earnings of $6.60 per share, which beat the Zacks Consensus Estimate of $6.48 and increased 12.4% year over year. Reported earnings came in at $6.75 per share, including a 15-cent nonrecurring benefit related to tariff refunds.
Total revenues rose 11.1% year over year to $95,723 million, surpassing the consensus estimate of $94,820 million. Comparable sales increased 9.4%, while digitally enabled comparable sales advanced 19.5%.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
COST Posts Solid Comparable Sales Growth
Net sales improved 11.2% year over year to $93,873 million. Comparable sales growth was supported by a 3.3% increase in worldwide traffic and a 5.9% rise in average ticket.
Excluding gasoline price and foreign exchange impacts, comparable sales increased 6.7%, with both adjusted ticket and traffic growth of 3.3%. Gas price inflation contributed about three percentage points to reported sales growth, while foreign exchange had a roughly 0.3% negative impact.
Costco Sees Broad Regional Sales Gains
Comparable sales in the United States increased 10.7%, while Canada and Other International markets registered gains of 5% and 7%, respectively. On an adjusted basis, comparable sales grew 7.2% in the United States, 4.6% in Canada and 6.2% in Other International markets.
Nonfoods delivered mid-to-high-single-digit comparable sales growth, led by gold and jewelry, home furnishings, housewares, small electrics, and health and beauty. Fresh foods recorded mid-single-digit comparable sales growth, driven by bakery and meat, while food and sundries posted low-to-mid-single-digit gains.
COST’s Membership Trends Remain Healthy
Membership fee income increased 7.3% year over year to $1,849 million and rose 7.7%, excluding foreign exchange effects. Excluding foreign exchange and the September 2024 membership fee increase, membership income advanced 6.8%, driven by higher executive membership penetration and membership growth.
Costco ended the quarter with 84.1 million paid members, up 3.8%, and 150.4 million cardholders, up 3.6%. Paid executive memberships increased 9.4% to 42.3 million. U.S. and Canada renewal rates improved 10 basis points sequentially to 92.3%, while the worldwide rate reached 89.8%.
Costco's Digital Business Maintains Momentum
Digitally enabled comparable sales increased 19.5%, or 19.8% excluding foreign exchange impacts. Site and app traffic climbed 30%, with pharmacy, home furnishings, small electrics, hardware, housewares, domestics, and health and beauty among the strongest digital categories.
Costco expanded third-party same-day delivery through Uber Eats and DoorDash in the United States alongside its Instacart partnership. Management said digitally enabled sales exceeded $33 billion in fiscal 2026 and grew more than 20%.
COST's Margins Reflect Gas and Tariff Effects
Gross margin contracted 11 basis points year over year to 11%. Excluding gasoline inflation, however, gross margin improved 20 basis points. Core-on-core margins on their own sales increased 18 basis points after excluding tariff refund effects, helped by supply-chain efficiencies and improved fresh-food labor productivity.
The SG&A rate improved 27 basis points to 8.9%, though the improvement narrowed to two basis points, excluding gasoline inflation. Operating income increased 13.8% year over year to $3,801 million.
Costco Expands Warehouses and Investment
Costco ended fiscal 2026 with 939 warehouses after opening 25 net new locations during the year. Management plans 33 openings in fiscal 2027, including five relocations, for a net 28 new warehouses.
Cash and cash equivalents stood at $20,207 million at fiscal year-end, up from $14,161 million a year earlier. Fiscal 2026 operating cash flow increased to $15,825 million from $13,335 million, while additions to property and equipment totaled $6,435 million. Costco plans approximately $7.5 billion in capital expenditures for fiscal 2027, primarily supporting warehouse growth and supply-chain investments.
Shares of this Zacks Rank #3 (Hold) company have fallen 5.9% over the past three months compared with the industry’s decline of 4.8%.
Don’t Miss These Solid Bets
Target Corporation (TGT - Free Report) , a general merchandise retailer, carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Target’s current financial-year sales and earnings indicates growth of 5.1% and 37.8%, respectively, from the prior-year reported levels. TGT delivered a trailing four-quarter earnings surprise of 10.5%, on average.
Ross Stores, Inc. (ROST - Free Report) is one of the largest off-price apparel and home fashion chains in the United States. ROST carries a Zacks Rank #2.
The consensus estimate for Ross Stores’ current fiscal-year sales and earnings per share implies growth of 12.4% and 32.7%, respectively, from the year-ago reported figures. ROST delivered a trailing four-quarter earnings surprise of 11.2%, on average.
Dollar General Corporation (DG - Free Report) , a discount retailer, currently carries a Zacks Rank #2. DG delivered a trailing four-quarter earnings surprise of 19.1%, on average.
The Zacks Consensus Estimate for Dollar General's current fiscal-year sales and earnings calls for growth of 4.2% and 15.2%, respectively, from the year-ago reported figures.