ISSAQUAH, Wash. — Costco Wholesale Corp. posted stronger-than-expected third-quarter results on Thursday, buoyed by robust sales growth, rising e-commerce activity, and resilient membership income, even as the retail giant navigates a volatile global trade landscape marked by shifting tariffs.
For the fiscal third quarter ended May 12, the warehouse club reported net sales of $61.96 billion, up 8% from $57.39 billion a year earlier. Comparable U.S. sales increased 6.6%, or 7.9% when excluding gas price deflation. Meanwhile, e-commerce comps surged 14.8%, with adjusted growth of 15.7% when factoring out currency effects.
Costco also saw membership fee income rise 10.4% to $1.24 billion. However, renewal rates edged slightly lower—to 92.7% in the U.S. and Canada, and 90.2% globally—largely due to one-time promotional sign-ups from a Groupon campaign in late 2023, chief financial officer Gary Millerchip said.
President and CEO Ron Vachris credited the company’s operational discipline and global sourcing strategy for driving performance, particularly as new tariffs threaten to disrupt traditional supply chains. "We rerouted many goods sourced from countries with large tariff exposure to our non-U.S. markets," Vachris said on the earnings call. "In the U.S., we pulled forward some items planned for the summer and sourced additional locally produced goods to reduce tariff impacts."
Costco's bulk pricing model and focus on value have positioned the retailer as a relative winner in a high-uncertainty retail environment, analysts say. “In times of consumer uncertainty, our Kirkland Signature brand is uniquely positioned,” Vachris added, noting private-label sales outpaced overall company growth in the quarter and now account for a larger share of the merchandise mix.
Gross margin improved by 41 basis points to 11.25%, with Millerchip attributing the lift to sales leverage, lower spoilage, and falling commodity costs. Operating expenses also rose, with the SG&A rate climbing 20 basis points to 9.16%, reflecting ongoing investments in employee wages and warehouse improvements. Capital expenditures for the quarter were approximately $1.13 billion.
Vachris said Costco opened nine new warehouses during the quarter—including locations in the U.S., Australia, and Japan—and plans to open another 10 in Q4. The company expects to finish the fiscal year with 914 warehouses globally.
Looking ahead, the executive team acknowledged that tariff uncertainty and macroeconomic pressures remain risks, but reaffirmed Costco’s long-term strategy. “Raising prices is always a last resort,” Millerchip said. “Our limited SKU model gives us agility, and our global scale gives us leverage.”
Costco also highlighted its recent digital initiatives, including a Buy Now, Pay Later program with Affirm aimed at boosting sales of high-ticket items online. Early results have been encouraging, the company said.
“As the economic outlook remains fluid, our ability to deliver consistent value and service continues to resonate with members,” Vachris concluded. “We believe we’re well-positioned to navigate what lies ahead.”
