Costco Wholesale Corp Earnings - Q2 2025 Analysis & Highlights

Key Takeaways

The Q4 2025 Costco Wholesale Corp. earnings call highlighted strong financial results, membership growth, e-commerce performance, and expansion plans, while also addressing inflation, tariffs, and strategies for delivering member value.

Key Financial Results

  • Net income for the fourth quarter was $2.61 billion, or $5.87 per diluted share, up 11% from $2.35 billion, or $5.29 per diluted share, in the fourth quarter last year.
  • Excluding a non-recurring tax benefit from the previous year, net income and earnings per diluted share both grew 14%.
  • Net sales for the fourth quarter were $84.43 billion, an increase of 8% from $78.18 billion in the fourth quarter last year.
  • Comparable sales were 5.7%, or 6.4% adjusted for gas deflation and FX.
  • E-commerce comparable sales were 13.6%, or 13.5% adjusted for FX.
  • Membership fee income was $1.72 billion, an increase of $212 million or 14% year-over-year.
  • Adjusting for FX, the increase was 13.6%.

    • Business Segment Results

  • Fresh sales were up high single digits, led by double-digit growth in meat.
  • Non-food comp sales were in the high single digits.
  • Food and sundries had mid to high single-digit comps, with cola and candy showing the strongest results.
  • Within ancillary businesses, pharmacy, optical, and hearing aids all had strong quarters.
  • Gas volumes were positive low single digits in the quarter, but gas comps were negative mid to high single digits due to a lower average price per gallon.

    • Capital Allocation

  • Capital expenditure in Q4 was approximately $1.97 billion, and for the full year, it was a little under $5.5 billion.
  • Additional investments were made in Q4 to support accelerated warehouse growth, including the 35 planned openings in fiscal year 2026.
  • The company increased its pace of spend on remodels to ensure that it continues to offer its members a best-in-class experience across all of its warehouses.
  • Land purchases for future depot expansions and investments in manufacturing facilities also contributed to the increased spend.

    • Industry Trends and Dynamics

  • Overall, inflation remained in the low to mid single-digit range.
  • In non-foods, inflation returned for the second consecutive quarter, primarily driven by imported items.
  • Supply remains relatively stable with no notable issues.

    • Competitive Landscape

  • The company continues to work closely with its suppliers to find ways to mitigate the impact of tariffs, including moving the country of production where it makes sense and consolidating buying efforts globally to lower the cost of goods across all its markets.
  • The company is changing item assortment where appropriate, including leaning into KS items and increasing domestically-sourced goods.

    • Macroeconomic Environment

  • Despite the current macroeconomic uncertainty, the company remains confident in its ability to grow market share by continuing to deliver exciting, high-quality items at the best value for its members.
  • The merchants adjusted their plans to mitigate tariff impacts and source items that the members need, while delivering the lowest price at the best value.

    • Growth Opportunities and Strategies

  • The company plans to open another 35 warehouses in fiscal year 2026, of which five are relocations.
  • The company continues to see significant opportunities for expansion both domestically and internationally across the markets where it currently operates.
  • To increase value and convenience to its members, on June 30, the company added executive member exclusive operating hours in the mornings and an additional hour on Saturday evenings for all members in its US warehouses.
  • The company also introduced a $10 credit per month on Instacart purchases greater than $150.
  • The company is improving the member experience through the rollout of enhanced checkout technology in all US warehouses.
  • The company continues to make progress with its technology road map for digital and e-commerce.
  • The company is continuing to look at opportunities to move more KS product sourcing into the countries and regions where the items are sold, helping to lower costs and reduce emissions.
  • The company is changing its e-commerce comparable sales metric to now report digitally-enabled comparable sales, incorporating all sales that originated online.

    • Financial Guidance and Outlook

  • The company will announce its September sales results for the five weeks ending Sunday, October 5th, on Wednesday, October 8th, after market close.
  • For fiscal year 2025, the company's digitally-enabled sales totaled more than $27 billion.