Costco's International Markets Drive the Next Phase of Growth

Core Insights - Costco Wholesale Corporation is experiencing a significant shift in growth dynamics, with international markets becoming vital contributors to overall sales growth while the U.S. remains the largest market [1] Sales Performance - For the five weeks ended January 4, 2026, Costco reported a 7% year-over-year increase in total comparable sales, driven primarily by strong international performance, with Canada and Other International markets seeing increases of 8.4% and 10.6% respectively, compared to 6% growth in the U.S. [2] - Over the first 18 weeks of fiscal 2026, total comparable sales grew 6.6%, with international markets outperforming the domestic segment, showing 7% growth in Canada and 9.5% in Other International markets, while the U.S. grew by 5.9% [3] Global Expansion - Costco is expanding its global footprint, currently operating 290 warehouses outside the U.S. in major markets including Canada, Mexico, Japan, the U.K., Korea, Australia, Taiwan, China, Spain, France, Sweden, Iceland, and New Zealand [4] - The company plans to open 30 net new clubs in fiscal 2027 and beyond, with approximately half of these planned outside the U.S., supported by a strong global membership renewal rate of 89.7% [5][8] E-commerce and Consumer Demand - By combining a strong physical presence with an expanding e-commerce reach, Costco is effectively capturing global consumer demand, particularly as international consumers seek value and quality through its bulk-purchasing model [6] Competitive Landscape - Costco's shares have declined by 2.3% over the past year, contrasting with the industry's growth of 6.1%. In comparison, Dollar General shares have increased by 101.8%, while Target's shares have dropped by 24.9% [7] Valuation Metrics - Costco's forward 12-month price-to-earnings ratio is 44.10, which is higher than the industry average of 30.16, indicating a premium valuation compared to Target (13.80) and Dollar General (20.51) [9] Financial Estimates - The Zacks Consensus Estimate for Costco's current financial-year sales and earnings per share indicates year-over-year growth of 7.5% and 11.7% respectively, with a projected 7.2% rise in sales and 9.2% growth in earnings for the next fiscal year [10]