COST Q4 2026 Earnings Analysis
Costco's Q4 FY2026 revenue hit $93.87B (+11.2% YoY) with 9.4% comparable sales growth, driven by record executive penetration and strong ancillary business expansion.
Key Metrics
Key Takeaways
- Comparable sales +9.4% driven by 3.3% traffic growth and 5.9% higher avg transaction.
- Ancillary businesses surged with gas mid-30s+ comp, pharmacy +20%, digital +19.5%.
- Executive member penetration hit record 50.3%, signaling higher loyalty and spend.
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Transcript
// Full episode scriptWelcome to Beta Finch, your AI-powered earnings breakdown, where we take the numbers straight from the source and translate them into something you can actually use. I'm Alex.
And I'm Jordan. Today we're digging into Costco's fiscal fourth quarter and full-year 2026 results.
And before we get going, our standard reminder — this podcast is AI-generated content for educational and entertainment purposes only. Nothing we discuss should be considered investment advice. Always do your own research and consult a qualified financial advisor before making any investment decisions.
Okay, let's get into it, because there's a lot here. Costco just closed out fiscal 2026 with over 10% top-line sales growth for the year, and Q4 net sales came in at $93.87 billion — up 11.2% year over year.
And comparable sales were up 9.4% overall, 6.7% once you strip out gas price inflation and foreign exchange. That's actually been a pretty steady band for them — Gary Millerchip, the CFO, mentioned that 6-7% range has held for basically a full year now.
Right, and net income was $2.998 billion, or $6.75 a share. But here's a wrinkle — that includes a one-time $0.15 per share benefit from IEEPA tariff refunds. Strip that out, and net income and EPS were still up a healthy 12.3% and 12.4% respectively.
The tariff refund story is worth pausing on. Costco got $184 million back in Q4 — that's about a third of what they expect total — and instead of just banking it, they plowed a chunk of it back into member value. Price cuts on everyday stuff: produce, meat, beverages, even home furnishings and hardware.
Which is very on-brand for Costco. CEO Ron Vachris basically said it outright — when they see lower prices, they see an opportunity. And it's not just talk; they're planning to keep reinvesting the majority of future tariff refunds the same way into fiscal 2027.
Let's talk membership, because that's always the metric everyone obsesses over. Executive members hit an all-time high — 42.3 million, up 9.4% year over year. Total paid membership was 84.1 million, up 3.8%.
But an analyst on the call — Scot Ciccarelli from Truist — pushed on this pretty hard. Membership growth has been slowing for eight straight quarters. Gary's answer was essentially: this is more of a normalization than a red flag. New sign-ups are still growing, renewal rates ticked up to 92.3% in the U.S. and Canada, and the real story is quality over raw headcount — more executive members, more gas engagement, more digital engagement, all of which correlate with higher spend and stickier loyalty.
The under-40 member cohort is a big part of that story too. It's grown nearly 60% since COVID and now makes up more than a quarter of Costco's total membership base. They spend less initially, but the expectation is they mature into higher-value members over time.
Now, on the ancillary business side — gas, pharmacy, and travel were the real stars. Gas had a record year, with comps up in the mid-30s, and Costco says it saved members over $3.2 billion at the pump versus market average pricing.
Pharmacy grew nearly 20%, even absorbing headwinds from Medicare pricing changes on drugs, partly thanks to GLP-1 programs and their fertility program driving double-digit script growth. And travel — vacation packages, cruises, car rentals — all grew double digits. There was this incredible anecdote about a member booking a 154-night cruise for over $218,000 and getting an $8,800 shop card back.
That's a wild flex for what's supposed to be a value retailer, but it kind of shows the range Costco's operating in right now — from Kirkland walnuts down four bucks a bag to six-figure cruise bookings.
Let's touch on digital, because there was real news there. Costco's expanding same-day delivery partnerships — Uber Eats is going from 17 states to nationwide, and DoorDash is expanding too, joining their long-running Instacart relationship. Digitally enabled sales topped $33 billion for the year, up more than 20%.
And management was clear that this is mostly incremental business, not cannibalizing warehouse trips. Traffic to Costco's site from AI search — think ChatGPT, Gemini, Claude — grew triple digits for a second straight quarter, and interestingly, "Costco membership" itself is one of the top search terms showing up in those AI results.
One fun detail buried in the merchandising update — the food court churro is officially coming back to all U.S. locations this month. Social media rumors confirmed.
Never bury the churro lead, Alex.
Noted for next time. On the analyst side, the most pointed exchange was with UBS's Michael Lasser, who asked whether the tariff-funded price cuts are actually moving the sales needle, since the growth trajectory hasn't visibly accelerated. Gary's response: excluding gas, the 6-7% comp range has held steady, non-food was actually the strongest category in the quarter, and they view the reinvestment less as a growth lever and more as simply giving value back to members for tariffs they paid.
There was also a good exchange on inflation and LIFO accounting. They took a $152 million LIFO charge in the quarter, mostly from memory costs in consumer electronics and oil-related items tied to Middle East conflict disruptions — but Gary was careful to frame that as a true-up of the full year's inflation landing late, not a sign that inflation is suddenly accelerating.
So stepping back — what does this mean for investors going forward? Costco heads into fiscal 2027 planning 33 new warehouses, including expansion into Europe, Canada, Mexico, and new U.S. markets like Buffalo and Lawrence, Kansas. Capital expenditure is stepping up to roughly $7.5 billion to support that growth.
The core thesis really hasn't changed — steady comp growth, expanding ancillary businesses like gas, pharmacy, and travel, and a membership base that's getting higher quality even if headline growth is decelerating. The tariff refund story adds some near-term noise to the earnings numbers, but management is being transparent about isolating that impact quarter to quarter.
And as always, before we sign off — everything discussed is AI-generated analysis for educational purposes. Past performance doesn't guarantee future results. Please do your own due diligence.
Looking ahead, keep an eye on that September sales report dropping October 7th, and watch how the executive membership penetration trend feeds into renewal rates over the next few quarters.
That's it for this episode of Beta Finch. Thanks for listening, and we'll catch you next time.
See you then.