Costco Q4 Earnings Top Estimates, Comparable Sales Rise 5.7%

Costco Wholesale Corporation COST reported fourth-quarter fiscal 2025 results, wherein the top line marginally fell short of the Zacks Consensus Estimate, while the bottom line beat the same. Nonetheless, both revenues and earnings improved year over year, driven by robust membership growth, resilient traffic, double-digit e-commerce gains and margin expansion.

Costco’s Quarterly Performance: Key Metrics and Insights

Costco reported quarterly earnings of $5.87 per share for the quarter under review, which beat the Zacks Consensus Estimate of $5.81. The metric increased from $5.15 per share reported in the prior-year period, which excludes the non-recurring tax benefit of 14 cents a share. 

Total revenues, comprising net sales and membership fees, reached $86,156 million, marking an 8.1% increase from the year-ago quarter. However, the figure came below the Zacks Consensus Estimate of $86,179 million.

Costco’s comparable sales rose 5.7% year over year in the quarter. Comparable sales in the United States grew 5.1%, while Canada and Other International markets saw increases of 6.3% and 8.6%, respectively.

Costco’s strategic investments, customer-centric approach and merchandise initiatives, along with an emphasis on membership growth, have helped it capture market share and maintain steady revenue growth. By prioritizing value and quality, the company has built strong customer loyalty, leading to an impressive membership renewal rate of 92.3% in the United States and Canada and 89.8% worldwide in the quarter.

Costco Wholesale Corporation Price, Consensus and EPS Surprise

Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote

Costco Achieves Membership Growth and Improved Margins

Costco's net sales jumped 8% year over year to $84,432 million, while membership fees increased 14% to $1,724 million in the reported quarter. The company ended the quarter with 81 million paid members, up 6.3% from the prior year. The number of total cardholders grew 6.1% to reach 145.2 million. Executive memberships rose 9.3% to 38.7 million, now accounting for 47.7% of paid members and 74.2% of worldwide sales. 

Traffic or shopping frequency improved 3.7% globally and 3.5% in the United States, while the average transaction or ticket grew 1.9% worldwide and 1.5% in the United States.

Comparable sales, excluding gasoline prices and foreign exchange impacts, rose 6.4%. In the United States, comparable sales increased 6%, while Canada and Other International markets saw gains of 8.3% and 7.2%, respectively. 

Costco’s e-commerce performance was strong, with comparable sales rising 13.6% year over year, or 13.5%, after excluding the impact of gasoline prices and currency fluctuations.

The gross margin expanded 13 basis points year over year to 11.1%, aided by fresh food efficiencies, higher Kirkland Signature penetration and supply chain improvements. The operating income grew 9.8% to $3,341 million, while the operating margin improved 10 basis points to 3.9%.

Costco's Store Updates and Expansion Plans

Costco currently operates 914 warehouses. These include 629 in the United States and Puerto Rico, 110 in Canada, 42 in Mexico, 37 in Japan, 29 in the United Kingdom, 20 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, two in Sweden, and one each in Iceland and New Zealand.

During the quarter under discussion, Costco opened 10 new warehouses, including a relocation in Canada, a 20th location in Korea and a second in Sweden. For fiscal 2025, the company added 24 net new warehouses and plans to open 35 new warehouses in fiscal 2026, including five relocations.

Costco’s Financial Health Snapshot

Costco ended the quarter with cash and cash equivalents of $14,161 million and long-term debt (excluding the current portion) of $5,713 million. Shareholders’ equity was $29,164 million. Management incurred capital expenditures of roughly $1.97 billion in the quarter, bringing the full-year total to just under $5.5 billion. 

Shares of this Zacks Rank #3 (Hold) company have advanced 2.9% year to date compared with the industry’s rise of 3.8%.

Stocks to Consider

The Chefs' Warehouse, Inc. CHEF, a premier distributor of specialty food products, currently sports a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 11.3%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Chefs' Warehouse's current financial-year sales and earnings implies growth of 6.6% and 19.1%, respectively, from the year-ago reported numbers.

The TJX Companies, Inc. TJX, the leading off-price apparel and home fashion retailer in the United States and worldwide, currently carries a Zacks Rank #2 (Buy). TJX has a trailing four-quarter earnings surprise of 5.4%, on average. 

The Zacks Consensus Estimate for The TJX Companies’ current financial-year sales and earnings calls for growth of 5.4% and 7.5%, respectively, from the year-ago reported numbers.

Grocery Outlet Holding Corp. GO, an extreme value retailer of quality, name-brand consumables and fresh products, carries a Zacks Rank #2. GO has a trailing four-quarter earnings surprise of 28.2%, on average. 

The Zacks Consensus Estimate for Grocery Outlet’s current financial-year sales and earnings suggests growth of 8.3% and 1.3%, respectively, from the year-ago reported numbers.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research