Core Viewpoint - Costco's Q1 FY2026 performance exceeded market expectations, showcasing strong sales growth despite economic challenges [1][2]. Financial Performance - Q1 revenue reached $67.31 billion, a 6.4% year-over-year increase, surpassing the expected $67.14 billion [1]. - Net sales amounted to $65.98 billion, up 8.2% year-over-year [1]. - Membership fees increased to $1.33 billion, reflecting a 14.0% growth [1]. - Net profit was $2.00 billion, a rise of 11.3% year-over-year, with diluted earnings per share at $4.50, exceeding the forecast of $4.27 [1]. - Same-store sales grew by 6.4%, with U.S. same-store sales up 5.9% [1]. E-commerce and Consumer Trends - E-commerce sales surged by 20.5%, driven by consumer demand for gifts and decorations during the holiday season [2]. - The quarter saw double-digit year-over-year growth in sales of gold, jewelry, small electronics, and clothing [2]. - The company is expanding its e-commerce operations and enhancing in-store experiences to improve customer satisfaction [2]. Membership and Renewal Rates - Membership renewal rates have shown signs of slowing, with a decrease from 90.2% to 89.8% in Q4 FY2025, and a slight drop to 89.7% in Q1 FY2026 [3]. - The decline in renewal rates is attributed to more online registrations, which have a lower average renewal rate [3]. Operational Challenges and Cost Management - Concerns exist regarding the impact of tariffs on Costco's operating costs and profit margins, with the company being a significant litigant against the Trump administration over tariff issues [4]. - Despite these challenges, Costco's Q1 gross margin remained stable at 11.32% year-over-year [4]. - The company is implementing various measures to mitigate tariff impacts, including increasing private label promotions and sourcing from countries with lower tariff rates [4].

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]