Costco Wholesale (NasdaqGS:COST) 2025 Update Summary Industry Overview - The conference call pertains to the retail industry, specifically focusing on Costco Wholesale's sales performance for the month of September 2025. Key Financial Metrics - **Net Sales**: $26.58 billion, an increase of 8% from $24.62 billion in September 2024 [2] - **Comparable Sales**: - US: 5.1% - Canada: 6.3% - Other International: 8.5% - Total Company: 5.7% - Digitally Enabled: 26.1% [2][3] - **Traffic Growth**: Comparable traffic increased by 2.1% worldwide and 1.4% in the US [4] - **Average Transaction Value**: Increased by approximately 3.5%, with a 3.8% increase when excluding gas deflation and foreign exchange impacts [5] Sales Performance Insights - **Regional Highlights**: - Strongest comparable sales in the US were observed in the Northwest, Midwest, and Los Angeles [5] - Internationally, the best results were in Korea, Australia, China, and Taiwan, driven by holiday shifts [6] - **Merchandising Performance**: - Food and sundries: Positive mid-single digits - Fresh foods: Up mid to high single digits, with strong performance in meat and bakery [6] - Non-foods: Positive high single digits, with jewelry, majors, and health and beauty performing well [7] - Ancillary business sales: Up mid-single digits, with pharmacy, hearing aid, and optical as top performers [7] External Factors Impacting Sales - **Gas Price Deflation**: Remained relatively flat, negatively impacting total reported comparable sales by less than 10 basis points [4] - **Foreign Exchange Impact**: - Canada: Negative impact of approximately -2.5% - Other International: Positive impact of approximately +1% - Total Company: Negative impact of approximately -0.2% [4] Future Outlook - The next reporting period will cover four weeks from October 6 to November 2, 2025, compared to the same period in 2024 [8]

Core Insights - Costco Wholesale Corp. reported an 8% year-over-year sales increase through last month, indicating continued sales growth and alleviating concerns from Wall Street regarding future growth prospects [1] Company Performance - The 8% sales gain reflects Costco's ongoing ability to attract customers and maintain a strong sales trajectory [1] - This performance marks a continuation of Costco's streak of sales gains, suggesting robust operational health and consumer demand [1] Market Reaction - The sales increase has eased Wall Street's concerns about Costco's future growth, indicating positive market sentiment towards the company's performance [1]

Core Insights - Gold prices have reached record highs, exceeding $4,000 per ounce, which is significantly boosting demand at Costco [1] - Costco is estimated to sell around $200 million of gold and silver monthly, with inventory often selling out within hours [2] - Despite high prices potentially deterring some buyers, Costco continues to sell its gold supplies quickly, aided by its low markup strategy [4] Sales Performance - The company reported strong online sales for gold, contributing to its overall e-commerce growth, which was up 15.6% year-over-year [9] - Digital sales growth follows a previous increase of 16.1% in the prior year, indicating a consistent upward trend since Costco began selling gold [9] Membership and Marketing Strategy - Gold and silver sales are exclusive to members, creating additional buzz that attracts new sign-ups [10] - The relatively low membership fee of $65 is seen as negligible compared to the high-value purchases, such as gold bullion priced around $3,600 [10] Competitive Advantage - Costco's low markup on gold and silver makes it appealing to both professional and amateur collectors, positioning the wholesale club as an entry point for gold investing [4][8] - The strategy of routing significant sales through Costco.com allows the company to demonstrate strong e-commerce growth with minimal risk [9]

Core Insights - Shares of Costco have entered correction territory, declining nearly 14% from their all-time highs [1] Company Summary - Costco's stock has experienced a significant drop, indicating a potential shift in market sentiment [1]

Consumer Sentiment & Economic Concerns - Prime Day sales are viewed as an early indicator of US consumer health following the shutdown [1][2] - Growing concern around the cost of goods is leading consumers to seek ways to save money [4] - A government shutdown is estimated to negatively impact quarterly GDP by 0.1% per week, raising concerns about consumer spending if workers miss paychecks [9][10][11] Costco's Performance & Strategy - Costco is favored due to softening job markets, as consumers seek value [3][4] - Costco's membership renewal rate of over 90% provides a cushion and profitability tailwind [5] - Consumers may shift to buying in bulk at Costco to save money, even if it requires driving further [8] - Despite a high valuation of approximately 47 times forward earnings, Costco is seen as a way for consumers to stretch their dollars [5][6] AI Investment - The industry advises clients to continue investing broadly in the AI market with a long-term view, considering it's still in the early stages [13][14]

Core Viewpoint - The upcoming Amazon Prime Day is seen as an indicator of the health of the US consumer and overall market conditions [1][2] Consumer Behavior - There is a growing concern among consumers regarding rising costs, leading them to seek ways to save money [4] - In previous economic downturns, companies like Costco have performed well as consumers look for cost-effective options [4] Company Analysis: Costco - Costco has a high membership renewal rate of over 90%, providing a cushion for profitability [5] - Despite concerns about consumer spending, Costco's model allows consumers to stretch their dollars by purchasing in bulk [6][8] - The stock is currently valued at approximately 47 times forward earnings, indicating a high valuation [5] Economic Impact - Moody's estimates that each week of a government shutdown could negatively impact quarterly GDP by 0.1% [9] - The current government shutdown has not yet significantly impacted consumer behavior, but concerns are rising as it continues [10][11] AI Market Perspective - The AI sector is viewed as a long-term investment opportunity, with ongoing developments expected to influence the market positively [13][14] - Despite potential overvaluation, continued investment in AI-related stocks is encouraged as the market evolves [14]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended August 31, 2025 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-20355 Costco Wholesale Corporation (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Washington ...

Core Insights - Costco Wholesale Corporation (COST) reported its fourth-quarter fiscal 2025 results, highlighting stable growth and a loyal membership base, which has historically allowed it to navigate economic challenges better than competitors [1] Financial Performance - Shares of Costco fell 3.4% post-earnings release due to a top-line miss, despite year-over-year improvements in revenues and earnings driven by membership growth, resilient traffic, and e-commerce gains [2] - Comparable sales, excluding gasoline prices and foreign exchange impacts, rose 6.4%, with U.S. comparable sales increasing by 6%, and Canada and Other International markets seeing gains of 8.3% and 7.2%, respectively [2] - Membership fee income grew 14% year over year to $1,724 million in Q4, with less than half of this growth attributed to fee increases introduced last September [7] Membership and Growth Strategy - Costco ended the quarter with 81 million paid members, a 6.3% increase from the previous year, with executive memberships growing 9.3% to 38.7 million, accounting for 47.7% of all paid members and driving 74.2% of worldwide sales [3] - The company's high membership renewal rates stood at 92.3% in the U.S. and Canada, and 89.8% worldwide, reflecting strong member loyalty [6] E-commerce and Digital Expansion - E-commerce comparable sales rose 13.6% year over year, with site traffic up 27% and Costco Logistics deliveries increasing by 13% [9] - Management reported that "digitally enabled" sales exceeded $27 billion in fiscal 2025, indicating a strong digital performance [9] Capital Expenditures and Future Outlook - Costco generated $13,335 million in operating cash flow and ended the year with $14,161 million in cash and equivalents, with plans for modestly higher capital expenditures in fiscal 2026 to support 35 new store openings [10] - The Zacks Consensus Estimate for the current fiscal year increased by 16 cents to $20.01, while the estimate for the next fiscal year declined by 3 cents to $21.86, indicating expected year-over-year growth rates of 11.2% and 9.3%, respectively [4] Competitive Landscape - Costco's stock has underperformed relative to the industry, falling 6.2% over the past month compared to the industry's decline of 4.1% [13] - The stock is trading at a significant premium, with a forward 12-month price-to-earnings ratio of 45.11, higher than the industry average of 29.45 and the S&P 500's 23.65 [15]

Costco has a new growing customer base: members under the age of 40.  CFO Gary Millerchip told investors during its earnings call at the end of September that the membership warehouse is gaining an influx of younger shoppers. Almost half of its new member sign-ups during the three-month period ending on Aug. 31 were under the age of 40, Millerchip said on the call. The company also reported a 92.3% renewal rate across North America. The rate is down slightly from the prior quarter due to more people joining ...

Core Insights - Costco has begun offering Ozempic and Wegovy, injectable prescription drugs from Novo Nordisk, at its pharmacies nationwide for $499 per month, matching prices at CVS, Walmart, and the company's website [1][2] - Wegovy is approved for chronic weight management, while Ozempic is approved for treating type 2 diabetes and reducing cardiovascular risks, with Ozempic being prescribed off-label for weight loss [3][4] Company Financials - Costco reported a net sales increase of 8% for the fourth quarter ending August 31, 2025, reaching $84.4 billion, up from $78.2 billion the previous year [5] - For the fiscal year, net sales rose 8.1% to $269.9 billion from $249.6 billion [5] - The company's current market capitalization stands at $402.6 billion [5]