Quick Summary

• Quarterly earnings per share reached $4.58, surpassing analyst expectations of $4.55; total revenue of $69.6 billion exceeded the $69.3 billion forecast
• Comparable sales across stores increased 7.4%, while digitally-driven comparable sales jumped 22.6%
• Net income increased nearly 14% compared to the prior year, reaching $2.035 billion
• Revenue from membership fees expanded 13.6% to $1.355 billion; paid membership base grew to 82.1 million
• COST shares gained 14% year-to-date but declined 0.2% during premarket hours following the earnings release

Costco reported strong fiscal second-quarter 2026 results that exceeded Wall Street’s projections on most important performance indicators. The warehouse retailer’s net income advanced nearly 14% from the same period last year to $2.035 billion, translating to $4.58 per diluted share and beating the consensus forecast of $4.55.

Total revenue reached $69.6 billion, modestly surpassing the anticipated $69.3 billion. Comparable sales across the company’s warehouse locations increased 7.4% overall, or 6.7% when adjusted for gasoline price fluctuations and currency exchange impacts.

This marks an acceleration from the prior quarter ending in December, when adjusted comparable sales grew 6.4%. Sequential monthly trends also demonstrated strengthening momentum — comparable sales climbed 7% in December, 7.1% in January, and accelerated to 7.9% in February.

Costco Wholesale Corporation, COST

The company’s digital operations delivered particularly impressive results. Comparable sales through digital channels surged 22.6%, supported by a 32% increase in website visitors and a 45% jump in mobile app traffic throughout the quarter. Personalized product recommendation features alone generated more than $470 million in online revenue.

COST stock traded 0.2% lower in premarket activity on Friday following the earnings announcement, although shares remain 14% higher year-to-date — positioned to fully recover the losses experienced during the previous year.

Membership Revenue and Profitability Remain Strong

Income from membership fees increased 13.6% year-over-year to $1.355 billion. Approximately one-third of this growth stemmed from the membership fee adjustment implemented in September 2024 across U.S. and Canadian locations. When excluding the fee increase and foreign exchange impacts, membership income still expanded 7.5%.

The total paid membership count reached 82.1 million, representing a 4.8% increase from the prior year. Executive-level memberships climbed to 40.4 million, up 9.5%. The global renewal rate remained stable at 89.7%, unchanged from the previous quarter.

Renewal rates in the U.S. and Canada decreased 10 basis points sequentially to 92.1%, which management attributed to online membership enrollments — which historically renew at marginally lower rates compared to in-warehouse signups.

Gross profit margin expanded to 11.02% from 10.85% in the year-ago period. Core-on-core margins improved by 22 basis points, with improvements spanning food, non-food, and fresh merchandise categories. Selling, general, and administrative expenses rose modestly to 9.19% of sales from 9.06% last year, partially driven by increased general liability reserves.

Tariff Environment, Store Growth, and Forward Outlook

CEO Ron Vachris described the tariff landscape as “extremely fluid.” Recently eliminated IEEPA tariffs have been substituted with new global tariffs scheduled to remain in place for at least 150 days. Costco filed legal action in the Court of International Trade to preserve its ability to claim refunds if those tariffs were invalidated — which occurred in February.

Vachris noted the retailer did not transfer complete tariff costs to members in numerous instances. Should refunds materialize, the company intends to pass that value back through reduced prices and enhanced promotional offers. The company has already reduced prices on eggs, cheese, coffee, select paper goods, and certain tariff-impacted merchandise including textiles and cookware.

The retailer operated 924 warehouses globally at quarter-end. Management projects 28 net new location openings in fiscal 2026 and aims to sustain 30-plus new openings annually moving forward. Capital expenditures for the full year are estimated at approximately $6.5 billion.

February net sales totaled $21.69 billion, increasing 9.5% year-over-year. Total comparable sales rose 7.9% for the month (7.0% adjusted). Digital-enabled sales climbed 21.8%.

No special dividend was declared. The board indicated it would continue evaluating the possibility, but stated there were no announcements to make at this time.