Does Traffic Growth Signal a Strong Holiday Setup for Costco?

Costco Wholesale Corporation’s COST last reported quarter painted a compelling picture with strong traffic growth that could be an important signal for the holiday season. Comparable traffic, or shopping frequency, increased 5.2% worldwide in the third quarter of fiscal 2025, with a slightly higher 5.5% jump in the United States. 

This metric suggests that, despite a challenging consumer environment, Costco's value proposition remains strongly appealing to its members. The company's strategic initiatives, such as reducing prices on key items and extending gas station hours, have not only attracted more shoppers but also led to increased gallon sales. Costco is rolling out faster checkout options and promoting digital wallet use, moves aimed at easing congestion during peak holiday weeks.

The steady rise in foot traffic, along with a 2.7% jump in adjusted comparable ticket (excluding the impact of changes in gasoline prices and foreign exchange), indicates that members are visiting more frequently and spending more on each visit. While uncertainty related to the economic landscape and global tariffs remains, Costco remains confident about providing value to its customers. 

Digital channels are also playing a key role in driving traffic. Costco Logistics deliveries of big and bulky items surged 31% year over year in the last reported quarter, while options like Buy Now, Pay Later are giving shoppers more flexibility. Online sales were up 14.8% and site traffic climbed 20% in the last quarter.

With traffic building and systems in place to handle the rush, Costco appears well-positioned to meet holiday demand.

Costco Traffic Momentum Compared With Walmart & Target

Walmart Inc. WMT continues to post steady traffic gains, with U.S. comparable sales up 4.6% in the second quarter of fiscal 2026, driven by strength in grocery, health & wellness, and improving general merchandise trends. Walmart’s U.S. e-commerce sales climbed 26%, fueled by nearly 50% growth in store-fulfilled delivery, where about one-third of orders were completed within three hours.

Target Corporation TGT showed early signs of recovery after sluggish first-quarter fiscal 2025 results. While Target’s second-quarter sales fell 0.9% year over year, traffic trends improved meaningfully, especially in stores. Target registered an increase of 4.3% in comparable digital sales, fueled by robust same-day delivery and growth in Drive Up.

Walmart’s accelerating traffic and Target’s improving in-store momentum highlight a competitive retail landscape where holiday traffic could be a decisive factor.

What the Latest Metrics Say About Costco

Costco stock has risen 7.3% over the past year, outpacing the industry’s growth of 5.8%. 
 

From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 52.48, higher than the industry’s ratio of 31.72. COST carries a Value Score of D.
 

The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 8.1% and 11.6%, respectively. 
 

Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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