Costco tops expectations with increases in traffic, average ticket
Costco Wholesale Corp. entered its new fiscal year on the heels of a solid fourth quarter that beat top- and bottom-line expectations amid strength across its business.
The warehouse club giant’s traffic rose 3.3% worldwide, while the average ticket increased 5.9% during the quarter. Non-foods sales outpaced the overall business, while fresh departments, pharmacy, travel and digital channels all posted solid gains, company executives said on the earnings call. They said that the company spent some of the tariff refunds it received during the quarter into price reductions on certain items.
“Our members continue to show resilience in their spending, and they show a willingness to spend in discretionary areas where they’re seeing exciting new items at great value,” Costco CFO Gary Millerchip told analysts.
He noted that younger members and executive members are becoming a bigger part of the customer base, helping support long-term growth.
“Our member base under 40 has grown nearly 60% since COVID, increasing our total penetration of members under 40 to more than a quarter of our total base,” Millerchip said. “While these younger members start out spending a little less with us, over time, they grow into higher spending members.”
Expansion
Costco plans to open 33 warehouses in its current year (fiscal 2027), including five relocations, with a goal of opening 30 net new warehouses annually during the next five to 10 years. It expects capital spending of about $7.5 billion.
“We continue to see significant opportunities for new warehouses growth, including new U.S. markets such as Buffalo, N.Y., and Lawrence, Kansas, infills in our more mature U.S. markets, as well as international markets in which we operate,” Costco CEO Ron Vachris said on the earnings call.
Plans for fiscal 2027 include four locations in Europe, five in Canada and one in Mexico.
“We have a strong pipeline of new warehouses planned for Asia, Australia and other international markets in fiscal year 2028,” Vachris told analysts.
Fourth Quarter
Net income totaled $2.99 billion, $6.75 per diluted share, for the quarter ended Aug. 30, compared to $2.61 billion, $5.87 per share, compared to the year-ago period. Analysts had expected earnings of $6.55 per share.
This year’s fourth quarter was positively impacted by a non-recurring benefit of $0.15 per diluted share from International Emergency Economic Powers Act (IEEPA) tariff refunds received in the quarter, less partial reinvestment of those refunds in increased member values.
Total fourth-quarter revenue rose to $95.7 billion from $86.1 billion last year, topping estimates of $94.85.
Membership fee income rose 7.3% to $1.849 billion, helped by higher engagement and renewal rates.
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Total comparable sales rose 9.4%. Adjusted for the impact of changes in fuel prices and foreign exchange, comp sales rose 6.7%. Comparative sales increased 10.7% in the U.S. Adjusted U.S. comps rose 7.2%. Costco said its comparable ticket rose 5.9%.
Digitally enabled comps rose 19.5% during the fourth quarter. Traffic to Costco’s e-commerce site and app increased 30%.
Full Year
Net income for the fiscal year totaled $9.226 billion, or $20.76 per diluted share, compared to $8.099 billion, $18.21 per share, last year.
Total revenue rose to $303.1 billion from $275,2 billion last year.
Total company comparative sales 8.4%; adjusted comps rose 6.6%. Comp sales in the U.S. rose 8.2%. Adjusted U.S. comps were up 6.6%.
Costco continued to grow its digital sales throughout the year. Digital sales exceeded $33 billion during the fiscal year, rising more than 20%.
Costco opened 28 new warehouses during the full fiscal year, including three relocations. It ended the year with a total of 939 warehouses, including 647 in the United States and Puerto Rico.
The total also includes115 locations in Canada, 43 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, three in France, two in Sweden, and one each in Iceland and New Zealand. The company also operates e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan, Australia and China.
