Costco reported impressive fiscal third-quarter results on Thursday, surpassing Wall Street’s expectations with an 8% rise in sales. The warehouse club retailer posted earnings per share of $4.28, beating the expected $4.24, and revenue of $63.21 billion, slightly edging out the forecast of $63.19 billion. These strong figures reflect the company’s robust performance despite ongoing economic uncertainties and tariff concerns.
Revenue and Earnings Growth
Costco’s net income for the period ending May 11 rose to $1.90 billion, up from $1.68 billion in the same period last year. This translated to earnings of $4.28 per share, compared to $3.78 per share a year earlier. The company’s revenue grew from $58.52 billion to $63.21 billion, driven by strong comparable sales, which increased by 8%, and a nearly 16% boost in e-commerce sales, excluding gas and foreign exchange impacts. These figures highlight Costco’s ability to maintain growth even amid rising economic uncertainty.
Tariff Concerns and Potential Benefits
While global trade tensions and tariffs pose risks to consumer prices, Costco is well-positioned to benefit. Its competitive pricing and bulk discounts attract customers who are more price-sensitive, particularly in challenging economic environments. Additionally, Costco’s strong supplier relationships and large-scale operations give it an advantage in price negotiations, allowing the retailer to offer better deals to its members. The company’s business model, which includes selling discounted groceries and gas, ensures steady foot traffic even when consumers pull back on spending.
Costco’s Resilience in a Challenging Market
Unlike many of its retail counterparts, Costco does not provide an annual outlook, preferring to focus on quarterly results. However, CEO Ron Vachris emphasized on the March earnings call that customers increasingly rely on Costco during uncertain times. “In uncertain times, our members have historically placed even greater importance on the value of high-quality items at great prices,” Vachris stated. With a third of Costco’s U.S. sales coming from international imports, the company remains vigilant about tariff impacts on its supply chain and costs.
Challenges Amid Tariff Impact
Though Costco benefits from strong demand for its products, tariffs continue to pose challenges. The company may face increased costs as some of its goods are sourced from countries like China, Mexico, and Canada, where tariff rates are higher. Retailers like Best Buy and Walmart have already raised prices on certain products due to tariffs, and Costco may eventually follow suit. Despite these pressures, Costco’s stock has performed well, with shares up 10% this year, outpacing the broader market’s growth.
