Market Overview - Oil prices surged due to fears that Iran could close off the Strait of Hormuz, reaching their highest levels since July 2024, with WTI at $81 and Brent crude at $85 per barrel [2] - The Dow Jones Industrial Average closed down 784 points, or 1.61%, after experiencing a drop of 1200 points during the trading day [1] Company Earnings Reports - **Costco (COST)** reported a quarterly earnings beat with earnings of $4.58 per share, exceeding estimates by 3 cents, and revenues of $69.6 billion, which grew by 9.1% year over year, surpassing the anticipated $69.24 billion [3] - **Gap Inc. (GAP)** met earnings estimates at $0.45 per share but fell short on revenue, reporting $4.2 billion against the expected $4.24 billion. Gross margins decreased by 80 basis points year over year to 38.1% [4] - **Marvell Technology (MRVL)** achieved slight beats on both earnings and revenue, with earnings of $0.80 per share and revenues of $2.22 billion, exceeding estimates. The gross margin guidance for the current quarter is around 59% [5]

Core Insights - The company is focused on the development of transcript-related projects, indicating a commitment to enhancing their offerings in this area [1] Group 1 - The company publishes thousands of quarterly earnings calls each quarter, showcasing significant growth and expansion in their coverage [1]

Core Insights - Costco reported quarterly earnings of $4.58 per share, exceeding the Zacks Consensus Estimate of $4.55 per share, and showing an increase from $4.02 per share a year ago, resulting in an earnings surprise of +0.74% [1] - The company achieved revenues of $69.6 billion for the quarter ended February 2026, surpassing the Zacks Consensus Estimate by 0.52%, and up from $63.72 billion year-over-year [2] - Costco's stock has increased by approximately 16.8% since the beginning of the year, significantly outperforming the S&P 500's gain of 0.4% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $4.88, with expected revenues of $68.42 billion, and for the current fiscal year, the consensus EPS estimate is $20.22 on revenues of $297.54 billion [7] - The estimate revisions trend for Costco was favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock, indicating expected outperformance in the near future [6] Industry Context - The Retail - Discount Stores industry, to which Costco belongs, is currently ranked in the top 38% of over 250 Zacks industries, suggesting a favorable outlook for stocks within this sector [8]

Core Viewpoint - Costco is focused on returning tariff refund value to its members, although the specifics of the process and timing remain unclear [1][2]. Group 1: Tariff Refunds - The company is committed to finding the best way to return value to members through lower prices and better values when legal challenges recover charges passed on to them [2]. - Costco is among many companies suing the US government for refunds related to Trump's IEEPA tariffs, which were recently overturned by the Supreme Court [2]. Group 2: Pricing Strategy - To manage the impact of tariffs, the company has shifted countries of origin for certain items, consolidated global purchases, and emphasized its Kirkland Signature brand [3]. - These strategies are expected to provide Costco with a competitive advantage as new global tariffs replace the overturned IEEPA rules [3]. - The company has lowered prices on items such as textiles, bedding, and cookware as some tariffs have decreased, although tracking the exact impact of tariffs on specific items has been challenging [3]. Group 3: Pricing Philosophy - Costco aims to be the first to lower prices and the last to raise them, reflecting its commitment to value for members [4].

Financial Data and Key Metrics Changes - Net income for Q2 2026 was $2.035 billion or $4.58 per diluted share, up nearly 14% from $1.788 billion or $4.02 per diluted share in Q2 2025 [12] - Net sales for Q2 were $68.24 billion, an increase of 9.1% from $62.53 billion in Q2 2025 [12] - Membership fee income was $1.355 billion, an increase of $162 million or 13.6% year-over-year [14] Business Line Data and Key Metrics Changes - Comparable sales were up 7.4%, with digital sales up 22.6% [13] - Fresh comparable sales were up low double digits, led by meat and bakery [22] - Non-food comp sales were up high single digits, with top-performing departments including gold and jewelry, tires, and health and beauty [23] Market Data and Key Metrics Changes - U.S. comparable sales were up 5.2% or 6% adjusted for gas deflation and FX [29] - Canada comparable sales were up 12.8% or 9.3% adjusted for gas deflation and FX [29] - Other international markets saw a 17.9% increase or 10.9% adjusted for gas deflation and FX [29] Company Strategy and Development Direction - The company is focused on increasing its pipeline of new warehouses, targeting 30+ new openings per year in the coming years [9] - Digital enhancements are being implemented to improve member experience and efficiency, including automated pay stations and personalized product recommendations [10][27] - The company aims to be the first to lower prices and the last to raise them, with a focus on Kirkland Signature products [25] Management's Comments on Operating Environment and Future Outlook - Management noted that the impact of tariffs remains fluid, but they are committed to minimizing price impacts for members [5][6] - The company is optimistic about its growth prospects, citing strong member loyalty and the effectiveness of new digital initiatives [92] - Management acknowledged potential challenges from geopolitical events affecting fuel costs and shipping schedules [24] Other Important Information - Capital expenditure in Q2 was $1.29 billion, with an estimated full-year CapEx of approximately $6.5 billion [20][21] - The company is seeing a slight decline in U.S. and Canada renewal rates, attributed to the growth of online members who renew at a lower rate [16][102] Q&A Session Summary Question: Impact of weather on sales in January and February - Management noted that weather created some volatility but did not significantly impact total sales results [35][36] Question: Innovations for member experience and efficiency - Management highlighted that digital enhancements are improving member experience and efficiency, with no diminishing returns observed [42][44] Question: Inventory management and assortment changes - Management indicated that inventory levels are well managed and they are returning to a more traditional assortment for spring and summer [53] Question: Competitive openings and membership impact - Management stated that new competitor openings do not negatively affect membership growth, as frequency and visits remain strong [61][63] Question: Core-on-core margins outlook - Management expressed confidence in maintaining stable gross margins while continuing to lower prices for members [81][86] Question: Membership growth dynamics - Management explained that membership growth is slightly lower due to fewer new warehouse openings in new markets and cycling strong sign-ups from the previous year [92][94]

Financial Data and Key Metrics Changes - Net income for Q2 2026 was $2.035 billion or $4.58 per diluted share, up nearly 14% from $1.788 billion or $4.02 per diluted share in Q2 2025 [12] - Net sales for Q2 were $68.24 billion, an increase of 9.1% from $62.53 billion in Q2 2025 [12] - Membership fee income was $1.355 billion, an increase of $162 million or 13.6% year-over-year [14] - Gross margin rate was 11.02%, up 17 basis points year-over-year [16] Business Line Data and Key Metrics Changes - Comparable sales were up 7.4%, with digital sales up 22.6% [13] - Fresh comparable sales were up low double digits, led by meat and bakery [20] - Non-food comparable sales were up high single digits, with top-performing departments including gold and jewelry, tires, and health and beauty [21] - Pharmacy and food court experienced double-digit comparable sales growth [24] Market Data and Key Metrics Changes - U.S. comparable sales were up 5.2% or 6% adjusted for gas deflation and FX [26] - Canada comparable sales were up 12.8% or 9.3% adjusted for gas deflation and FX [26] - Other international markets saw a 17.9% increase or 10.9% adjusted for gas deflation and FX [26] - Traffic increased 3.1% worldwide, with average transaction value up 4.2% [13] Company Strategy and Development Direction - The company is focused on increasing its pipeline of new warehouses, with 28 net new openings expected in fiscal year 2026 [9] - Digital enhancements are being implemented to improve member experience and operational efficiency [10] - The company aims to be the first to lower prices and the last to raise them, with recent price reductions on key items [8] - Kirkland Signature products remain a priority, offering significant value compared to national brands [23] Management's Comments on Operating Environment and Future Outlook - Management noted that the impact of tariffs remains fluid, but they are actively managing costs to minimize price impacts on members [5][6] - The company is optimistic about its growth trajectory, citing strong member loyalty and ongoing digital enhancements [41] - Management acknowledged potential challenges from geopolitical events affecting fuel costs and shipping schedules [22] Other Important Information - Capital expenditure in Q2 was $1.29 billion, with an estimated full-year CapEx of approximately $6.5 billion [19] - The company is seeing a slight decline in U.S. and Canada renewal rates, attributed to the growing percentage of new online members [15] Q&A Session Summary Question: Impact of weather on sales in January and February - Management acknowledged some volatility due to weather but did not see a major impact on total sales results [32][33] Question: Innovations to improve member experience and efficiency - Management highlighted the benefits of digital enhancements in improving member experience and handling increased volume [40] Question: Changes to product assortment for spring and summer - Management indicated a return to more traditional assortment strategies as supply chains stabilize [49] Question: Competitive openings and membership impact - Management stated that new competitor openings do not negatively affect membership growth [56][60] Question: Renewal rates and auto-renewal program - Management noted a slight decline in renewal rates but is optimistic about initiatives to improve them, including the auto-renewal program [96]

Financial Data and Key Metrics Changes - Net income for Q2 2026 was $2.035 billion, or $4.58 per diluted share, up nearly 14% from $1.788 billion, or $4.02 per diluted share in Q2 2025 [11] - Net sales for Q2 2026 were $68.24 billion, an increase of 9.1% from $62.53 billion in Q2 2025 [11] - Membership fee income was $1.355 billion, an increase of $162 million or 13.6% year-over-year [13] - Gross margin rate was 11.02%, up 17 basis points year-over-year [15] Business Line Data and Key Metrics Changes - Comparable sales were up 7.4%, with digital sales up 22.6% [12] - Fresh comparable sales were up low double digits, led by meat and bakery [20] - Non-food comparable sales were up high single digits, with top-performing departments including gold and jewelry, tires, and health and beauty [20] - Pharmacy and food court experienced double-digit comparable sales growth [23] Market Data and Key Metrics Changes - U.S. comparable sales were up 5.2%, while Canada was up 12.8% [25] - Other international markets saw a 17.9% increase in comparable sales [25] - Traffic increased 3.1% worldwide, with average transaction value up 4.2% [12] Company Strategy and Development Direction - The company is focused on increasing its pipeline of new warehouses, with 28 net new openings expected in fiscal year 2026 [8] - Digital enhancements are being implemented to improve member experience and efficiency, including automated pay stations and personalized product recommendations [9][24] - The company aims to be the first to lower prices and the last to raise them, with recent price reductions on key items [6] Management's Comments on Operating Environment and Future Outlook - Management noted that the impact of tariffs remains fluid, but they are committed to minimizing the impact on prices for members [4] - The company is optimistic about its growth prospects, citing strong member loyalty and the effectiveness of new digital initiatives [86] - Management acknowledged potential challenges from geopolitical instability affecting fuel costs and shipping schedules [21] Other Important Information - Capital expenditure in Q2 was $1.29 billion, with an estimated full-year CapEx of approximately $6.5 billion [18] - The company launched approximately 30 new Kirkland Signature items in Q2, emphasizing value compared to national brands [22] Q&A Session Summary Question: Impact of weather on sales in January and February - Management indicated that weather created some volatility but did not significantly impact total sales results [32][33] Question: Innovations to improve member experience and efficiency - Management confirmed that digital enhancements are beneficial and that they continue to reinvest in the business [39][41] Question: Inventory management and assortment changes for spring and summer - Management stated that they are returning to a more traditional assortment and feel good about inventory levels [48] Question: Competitive openings and membership impact - Management does not foresee a negative impact on membership from competitor openings, focusing instead on delivering value [56][58] Question: Core-on-core margins and future outlook - Management expressed satisfaction with gross margin performance and emphasized a holistic approach to managing the business [76][79] Question: Membership growth dynamics - Management noted a slight decline in membership growth but highlighted strong underlying loyalty and growth in upgrades [86][88] Question: Renewal rates and auto-renewal program - Management acknowledged a slight decline in renewal rates but is optimistic about retention strategies and the auto-renewal program [96][98]

Core Insights - Costco reported a strong Q2 FY 2026 with net sales increasing by 9.1% to $68.24 billion and net income rising to $2.04 billion, or $4.58 per diluted share [2] - Total revenue, including membership fees, reached $69.6 billion, with membership fees alone at $1.36 billion, up 14% year-over-year [2] - Comparable sales increased by 7.4% companywide, with digitally-enabled sales up 22.6%, indicating a robust e-commerce performance [4] Financial Performance - For Q2 FY 2026, Costco's operating income grew to $2.61 billion, slightly exceeding analyst expectations of $4.55 EPS on $69.3 billion in revenue [2] - Membership fees for the first 24 weeks of fiscal 2026 totaled $2.68 billion, contributing significantly to overall revenue of $136.9 billion and operating cash flow of $7.68 billion [6] - The company reported $419 million in share repurchases and $1.15 billion in dividends paid during the same period, reflecting a commitment to returning cash to shareholders [6] Sales and Growth Metrics - Comparable sales excluding gas and foreign exchange were up 6.7%, with digitally-enabled sales up 21.7%, showcasing strong growth across various channels [4] - In February, net sales rose 9.5% to $21.69 billion, with total company comps up 7.9%, driven by a notable 17.9% increase in the "Other International" category [5] - The timing of Lunar and Chinese New Year positively impacted sales, contributing approximately four percentage points to the "Other International" growth [5]

2nd Quarter FY 2026 Supplemental Information 1 Q2 Highlights - Sales $68.2B Net Sales +9.1% Growth +7.4% Comparable Sales +6.7% Adjusted Comparable Sales1 +4.2% Comparable Ticket +3.5% Adjusted Comparable Ticket1 +22.6% Digitally-Enabled Comparable Sales +21.7% Adjusted Digitally-Enabled Comparable Sales2 1 - Excluding impacts from changes in gasoline prices and foreign exchange 2 - Excluding impacts from changes in foreign exchange rates 2 Q2 Highlights - Financial Performance | | Gross Margin | | | SG&A | ...

The company posted a quarterly profit of $2.04 billion, up from $1.79 billion a year earlier. ...