Core Insights - Costco is experiencing increased traffic in its warehouses and is strategically expanding its locations to tap into new markets and enhance capacity in existing areas [1][4] - The company plans to open 35 new locations in the current fiscal year, a significant increase from 27 openings in the previous year, indicating a busy expansion phase [2] - New warehouse openings are strategically placed near successful existing locations to optimize sales and alleviate congestion [3][4] Expansion Plans - The first four new locations will open in October in Fruitport, Michigan; Mechanicsburg, Pennsylvania; Indian Land, South Carolina; and Mississauga, Ontario [3] - This year's expansion includes five relocations of existing warehouses, which are expected to enhance sales and customer access [4] Operational Strategy - The average age of Costco warehouses in the US is around 20 years, and relocations provide an opportunity to refresh operations and maintain high service standards [8] - Old warehouses that are vacated can be repurposed into Costco Business Centers, catering to larger-volume customers [8] - New locations also create job opportunities for individuals seeking to start or advance their careers within the company, which is recognized as a competitive employer in the retail sector [9]

Market Performance - The blue-chip Dow index closed down 173 points, a decrease of 0.38% for the day [2] - The S&P 500 fell by 33 points, or 0.50%, while the Nasdaq also dropped by 0.50%, losing 113 points [2] - The small-cap Russell 2000 decreased by 25 points, representing a decline of 1.05% [2] - Bond yields are rising, with the 10-year yield at 4.17% and the 2-year yield at 3.66% [2] Economic Indicators - Existing Home Sales surged by 20.5% in August, totaling 4.00 million seasonally adjusted annualized units, slightly below expectations of 4.01 million but above the consensus estimate of 3.96 million [3] - The Midwest region experienced the largest gains in home sales, although the median home price there is 22% lower than the national median [3] Company Earnings - Costco reported fiscal Q4 earnings of $5.87 per share, exceeding the Zacks consensus of $5.81, but revenues were slightly below expectations at $86.16 billion compared to the anticipated $86.18 billion [4] - This marks the third earnings beat for Costco in the last four quarters, yet shares are down slightly in late trading, with a year-to-date increase of around 3% [4] Upcoming Economic Data - The Personal Consumption Expenditures (PCE) report is anticipated to impact the stock market, with the August data set to be released before the market opens on Friday [5] - Personal Income is expected to cool to 0.3% in August from 0.4% the previous month, while Personal Spending is projected to remain steady at 0.5% [6] - The PCE Index is forecasted to increase by 0.3% month over month for the headline and 0.2% for the core, with year-over-year PCE expected to rise by 10 basis points to 2.7% [6][7]

Group 1 - Costco's Q4 earnings exceeded expectations, indicating that consumers prioritize essential goods and seek discounts, with total revenue reaching $86.156 billion, an 8% year-over-year increase [1] - Net profit for Q4 was $2.610 billion, up from $2.354 billion in the same period last year, with diluted earnings per share at $5.87, surpassing market expectations [1] - Membership fee revenue for Q4 was $1.724 billion, compared to $1.512 billion in the same period last year, reflecting strong membership growth [2] Group 2 - Costco's strong sales growth is attributed to its promotional activities, diverse product offerings, and the popularity of its Kirkland brand, which attracts a wealthier and more loyal customer base [2] - The company has indicated that it will keep certain product prices stable and will stop selling items if prices become too high, while also increasing local sourcing of products [2] - Competitor Sam's Club is also performing well, with stable consumer behavior and a focus on maintaining low prices despite tariff-induced price increases [3]

Core Viewpoint - Costco's financial performance in the fourth quarter reflects the resilience of its warehouse membership retail model in the current economic environment, with revenue and EPS growth exceeding expectations and strong demand for essential goods among consumers [8][10]. Financial Performance Summary - Revenue: In the fourth quarter, total revenue reached approximately $86.16 billion, a year-over-year increase of 8.1%, slightly above analyst expectations of $86.03 billion [4]. - EPS: Diluted EPS was $5.87, up nearly 11% year-over-year, surpassing the expected $5.80, although growth has slowed compared to the previous quarter's 13.2% [5][11]. - Same-store Sales: Adjusted for gasoline prices and foreign exchange, same-store sales grew by 6.4%, exceeding the expected 6.21%, while the previous quarter's growth was 8% [5][11]. Segment Performance Summary - Net Sales: Fourth-quarter net sales were approximately $84.43 billion, reflecting an 8% year-over-year increase, consistent with the previous quarter [6]. - Membership Fees: Membership fees totaled $1.724 billion in the fourth quarter, a 14% increase year-over-year, accelerating from the previous quarter's 10.4% growth [7][11]. - E-commerce: Excluding gasoline and foreign exchange impacts, e-commerce growth was 13.5%, down from 15.7% in the previous quarter but still above 10% [7][11]. Market Context and Competitive Position - Costco's strong sales growth is attributed to its competitive pricing, diverse product offerings, and popular private label brand, Kirkland, which attract consumers [12]. - The company demonstrates greater resilience to macroeconomic fluctuations compared to competitors, as its customers are required to pay membership fees and tend to be more affluent and loyal [12]. - Despite recent strong performance in the retail sector, concerns about inflation driven by tariffs and a weakening job market may challenge consumer confidence in the coming months [12]. Strategic Responses to Cost Pressures - In response to rising costs, Costco plans to maintain stable prices on certain products and may cease sales of items that become too expensive [13]. - The company is increasing local sourcing for products and enhancing in-store services, such as extended hours for premium members, to stimulate consumption [13]. - Competitors like Walmart's Sam's Club are also experiencing healthy sales growth, indicating a stable and rational consumer spending pattern despite price increases due to tariffs [13].

Group 1 - Costco reported $86.16 billion in revenue for the quarter ended August 2025, reflecting a year-over-year increase of 8.1% [1] - The EPS for the same period was $5.87, compared to $5.15 a year ago, indicating a positive growth in earnings [1] - The reported revenue was slightly below the Zacks Consensus Estimate of $86.18 billion, resulting in a surprise of -0.03% [1] Group 2 - Comparable sales for the total company were 5.7%, slightly above the estimated 5.6% by analysts [4] - Changes in comparable sales excluding foreign-currency and gasoline prices were 6.4%, compared to the estimated 6.7% [4] - The total number of warehouses worldwide reached 914, slightly above the estimated 913 [4] Group 3 - The stock of Costco has returned -0.5% over the past month, while the Zacks S&P 500 composite increased by 2.7% [3] - Costco currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Group 1 - The article does not provide any specific information or data regarding companies or industries [1]

Financial Data and Key Metrics Changes - Net sales for Q4 were $84.43 billion, an increase of 8% from $78.18 billion in the same quarter last year [12] - Net income for Q4 was $2.61 billion, or $5.87 per diluted share, up 11% from $2.35 billion, or $5.29 per diluted share last year [12] - Membership fee income increased by $212 million or 14% year-over-year, reaching $1.72 billion [14] - Gross margin for Q4 was 11.13%, up 13 basis points year-over-year [17] - SG&A rate increased to 9.21%, up 17 basis points from 9.04% last year [18] Business Line Data and Key Metrics Changes - E-commerce sales exceeded $19.6 billion, increasing over 15% [7] - Comparable sales were up 5.7%, or 6.4% adjusted for gas deflation and foreign exchange [12] - E-commerce comparable sales were up 13.6%, or 13.5% adjusted for foreign exchange [13] - Fresh sales were up high single digits, led by double-digit growth in meat [22] - Non-foods had comparable sales in the high single digits, with strong performance in gold and jewelry, gift cards, and consumer electronics [23] Market Data and Key Metrics Changes - The company opened 10 new warehouses in Q4, bringing the total to 914 worldwide [5] - Plans to open another 35 warehouses in fiscal year 2026, including five relocations [5] - Total paid members reached 81 million, up 6.3% year-over-year, with 38.7 million paid executive memberships, up 9.3% [15] Company Strategy and Development Direction - The company is focusing on expanding both domestically and internationally, with significant opportunities identified in existing markets [5] - Continued investment in technology and digital enhancements to improve member experience and drive e-commerce growth [9][28] - Emphasis on sourcing more Kirkland Signature products locally to reduce costs and emissions [8][26] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in growing market share despite macroeconomic uncertainties [11] - The company is adapting to changes in membership dynamics, particularly with younger members joining through online sign-ups [16][41] - Management is optimistic about the upcoming holiday season, with a strong inventory position and new product offerings [27] Other Important Information - Capital expenditure for Q4 was approximately $1.97 billion, with a total of under $5.5 billion for the full year [20] - The company is focusing on improving member value through enhanced benefits and services, including extended operating hours and new membership perks [8][11] Q&A Session Summary Question: Awareness of extended member hours and potential for comp lift - Management believes they have effectively communicated the extended hours to members, with a 1% comp lift observed [32][33] Question: Expected decline in membership renewal rates - Management anticipates a continued decline in renewal rates due to a higher number of online sign-ups, but sees overall membership engagement as strong [38][41] Question: Insights on core margins and price increases - Core margins improved by 29 basis points year-over-year, with strong performance across all main categories [45][47] Question: Sustainability of membership fee income growth - Management remains optimistic about continued growth in membership income, driven by new warehouse openings and younger member engagement [56][57] Question: E-commerce and grocery demand in light of competition - Management noted strong growth in Instacart-driven traffic and is aware of increased competition, but remains confident in their offerings [65][66]

Financial Data and Key Metrics Changes - Net sales for Q4 were $84.43 billion, an increase of 8% from $78.18 billion in the same quarter last year [12] - Net income for Q4 was $2.61 billion, or $5.87 per diluted share, up 11% from $2.35 billion, or $5.29 per diluted share in the prior year [12] - Membership fee income increased by $212 million or 14% year over year, reaching $1.72 billion [14] - Gross margin for Q4 was 11.13%, up 13 basis points year over year [17] - SG&A rate increased to 9.21%, up 17 basis points from 9.04% last year [18] Business Line Data and Key Metrics Changes - E-commerce sales exceeded $19.6 billion, increasing over 15% year over year [7] - Comparable sales were up 5.7%, or 6.4% adjusted for gas deflation and foreign exchange [12] - E-commerce comparable sales were up 13.6%, or 13.5% adjusted for foreign exchange [13] - Fresh sales were up high single digits, with double-digit growth in meat [22] - Non-foods had comparable sales in the high single digits, with strong performance in gold and jewelry, gift cards, and consumer electronics [23] Market Data and Key Metrics Changes - The company opened 10 new warehouses in Q4, bringing the total to 914 worldwide [5] - Plans to open another 35 warehouses in fiscal year 2026, including five relocations [5] - Total paid members reached 81 million, up 6.3% year over year, with 38.7 million paid executive memberships, up 9.3% [15] Company Strategy and Development Direction - The company aims to grow market share by delivering high-quality items at the best value [11] - Continued focus on expanding Kirkland Signature product sourcing to lower costs and reduce emissions [8] - Investments in technology and enhanced checkout processes to improve member experience [9] - Emphasis on digital strategy to enhance member engagement and e-commerce capabilities [28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in growth despite macroeconomic uncertainties [11] - The company is adapting to changes in membership dynamics, particularly with younger members [41] - Management noted the importance of improving renewal rates for online sign-ups [42] Other Important Information - Capital expenditure in Q4 was approximately $1.97 billion, with a total of under $5.5 billion for the full year [20] - The company is focusing on mitigating tariff impacts and increasing domestic sourcing [26] - Inflation remained in the low to mid-single digit range, with varying impacts across categories [25] Q&A Session Summary Question: Awareness of extended member hours and potential comp lift - Management communicated effectively about extended hours, resulting in a 1% comp lift, with ongoing efforts to inform members [32][33][34] Question: Expected decline in membership renewal rates - Management acknowledged a potential decline in renewal rates due to increased online sign-ups but emphasized overall membership growth and engagement [38][39][41] Question: Insights on core margins and price increases - Core margins improved by 29 basis points, with effective management of tariffs and supply chain efficiencies contributing to this outcome [45][46][47] Question: Sustainability of membership fee income growth - Management remains optimistic about continued membership growth driven by new warehouse openings and younger member engagement [55][56] Question: E-commerce and grocery demand in light of competition - Management noted strong growth in Instacart-driven traffic and remains aware of competition, focusing on delivering desired products to consumers [65][66][67] Question: Future capital expenditure plans - Management indicated that capital expenditure would likely grow in 2026, focusing on warehouse openings, remodels, and technology investments [74][76]

Financial Data and Key Metrics Changes - Net sales for Q4 fiscal year 2025 reached $84.43 billion, an increase of 8% from $78.18 billion in the same quarter last year [12] - Net income for Q4 was $2.61 billion, or $5.87 per diluted share, up 11% from $2.35 billion, or $5.29 per diluted share in the previous year [12] - Membership fee income increased to $1.72 billion, a growth of 14% year over year [14] Business Line Data and Key Metrics Changes - E-commerce sales exceeded $19.6 billion, increasing over 15% [7] - Comparable sales were up 5.7%, or 6.4% adjusted for gas deflation and foreign exchange [12] - Gross margin for Q4 was reported at 11.13%, up 13 basis points year over year [17] Market Data and Key Metrics Changes - Traffic or shopping frequency increased by 3.7% worldwide [13] - The average transaction or ticket was up 1.9% worldwide, adjusted for gas deflation and FX [14] - The U.S. and Canada renewal rate was 92.3%, while the worldwide rate was 89.8% [15] Company Strategy and Development Direction - The company plans to open 35 new warehouses in fiscal year 2026, indicating continued expansion both domestically and internationally [5] - There is a focus on increasing Kirkland Signature product sourcing in the regions where items are sold to lower costs and reduce emissions [8] - The company aims to enhance member experience through improved checkout technology and digital enhancements [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in growing market share despite macroeconomic uncertainties [11] - The company is optimistic about the membership base growth, particularly among younger members [40] - Management noted that the membership renewal rate is expected to decline slightly due to a higher number of online sign-ups [41] Other Important Information - Capital expenditure for Q4 was approximately $1.97 billion, with a total of under $5.5 billion for the full year [20] - The company celebrated milestones such as the 40th anniversary of its $1.50 hot dog and soda combo [7] - Inflation remained in the low to mid-single digit range, with specific commodities experiencing varying inflation rates [25] Q&A Session Summary Question: Awareness of extended member hours and potential comp lift - Management indicated that communication about extended hours has been effective, with a 1% comp lift observed [32][33] Question: Membership renewal rate expectations - Management acknowledged that the renewal rate may continue to decline due to a higher number of online sign-ups but remains optimistic about overall membership growth [38][40] Question: Core margins and price increases - Management reported a 29 basis point increase in core margins, with improvements across all main categories [45][47] Question: Sustainability of membership fee income growth - Management expressed confidence in continued growth opportunities for membership income, driven by new warehouse openings and younger member engagement [56][57] Question: E-commerce and grocery demand - Management noted strong growth in Instacart-driven traffic and emphasized the importance of fresh foods in meeting online grocery demand [66][68]

Financial Data and Key Metrics Changes - Net sales for Q4 2025 reached $84.43 billion, an increase of 8% from $78.18 billion in Q4 2024 [10] - Net income for Q4 was $2.61 billion, or $5.87 per diluted share, up 11% from $2.35 billion, or $5.29 per diluted share in the same quarter last year [10] - Membership fee income increased to $1.72 billion, a 14% year-over-year growth [11] Business Line Data and Key Metrics Changes - E-commerce sales exceeded $19.6 billion, increasing over 15% year-over-year [5] - Comparable sales were up 5.7%, or 6.4% adjusted for gas deflation and foreign exchange [10] - Fresh sales were up high single digits, with double-digit growth in meat [20] Market Data and Key Metrics Changes - Traffic or shopping frequency increased by 3.7% worldwide [11] - The average transaction or ticket was up 1.9% worldwide, adjusted for gas deflation and FX [11] - Gas volumes saw positive low single digits, but gas comps were negative mid-to-high single digits due to lower average prices [22] Company Strategy and Development Direction - The company plans to open 35 new warehouses in fiscal year 2026, indicating continued expansion opportunities [4] - There is a focus on moving more Kirkland Signature product sourcing closer to the markets where they are sold to lower costs and reduce emissions [6] - The company is enhancing member experience through improved checkout technology and digital enhancements [7][25] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the ability to grow market share despite macroeconomic uncertainties [9] - The company is focused on improving renewal rates for new online members through targeted digital communications [15][40] - Overall inflation remains in the low to mid-single digit range, with specific commodities experiencing varying inflation rates [22][75] Other Important Information - Capital expenditure in Q4 was approximately $1.97 billion, with a total of under $5.5 billion for the full year [18] - The company celebrated milestones such as the 40th anniversary of its hot dog and soda combo and the 30th anniversary of Kirkland Signature [5] - Digital e-commerce site traffic was up 27%, with strong sales in various categories [24] Q&A Session All Questions and Answers Question: Awareness of extended member hours and potential comp lift - Management communicated effectively about the extended hours, resulting in a 1% comp lift, with expectations for further growth as awareness increases [30][31] Question: Expected decline in membership renewal rates - Management anticipates a continued decline in renewal rates due to a higher number of online sign-ups, but overall membership engagement remains strong [34][39] Question: Insights on core margins and price increases - Core margins improved by 29 basis points year-over-year, with a focus on maintaining value while navigating tariffs [42][44] Question: Sustainability of warehouse growth pace - The company sees potential for continued growth in warehouse openings, with a focus on making informed decisions rather than hitting specific targets [68][70] Question: Impact of tariffs on gross margin - Management is closely monitoring the impact of tariffs and is prepared to adjust pricing strategies as necessary [80]