Key Stats for Costco Stock
- Today’s Price Change: -1%
- Current Share Price: $1,004
- 52-Week High: $1,078
- COST Stock Price Target: $1,054
What Happened?
Costco (COST) shares declined modestly as the warehouse retailer missed consensus earnings estimates in fiscal Q3 of 2025.
In fiscal Q3, Costco reported revenue of $63.2 billion vs. estimates of $63.1 billion. Additionally, adjusted earnings per share of $4.28 beat analysts’ estimates of $4.24.
The earnings call revealed significant challenges from rising tariffs that are pressuring the retail giant’s operations and margins.
CFO Gary Millerchip disclosed that approximately one-third of Costco’s U.S. sales consist of imported goods, with items from China representing about 8% of total U.S. sales. Costco recorded a $130 million LIFO charge during the quarter, primarily driven by inflation in non-food imported items.
Management detailed how tariffs are forcing operational adjustments, including rushing orders ahead of tariff implementations, rerouting goods from high-tariff countries to non-U.S. markets, and increasing the domestic sourcing of private-label Kirkland Signature products.
CEO Ron Vachris acknowledged the complexity of navigating the evolving tariff landscape while maintaining Costco’s commitment to keeping prices low for members.
Despite strong fundamentals, including 8% comparable sales growth and nearly 16% e-commerce growth, the company faces margin pressure from tariff-related costs.
While Costco absorbed costs on staple items like pineapples and bananas to protect members, it raised prices on discretionary items like flowers from Central and South America, demonstrating the selective impact across product categories.
See Costco’s full analyst estimates, earnings results, and earnings transcript (It’s free) >>>
What the Market Is Telling Us
The muted reaction to COST stock suggests investors are focused on the longer-term implications of tariff pressures rather than the strong quarterly performance.
Costco’s ability to beat earnings expectations while navigating cost headwinds demonstrates operational resilience, but the magnitude of tariff exposure creates uncertainty about future margins.
As tariff-driven inflation potentially impacts consumer spending, Costco’s value proposition of bulk discounts and competitive pricing could drive increased membership sign-ups and higher retention rates.
Management’s strategic responses, including increased domestic sourcing, geographic redistribution of inventory, and continued investment in the Kirkland Signature private label brand, position Costco to weather tariff challenges more effectively than many of its competitors.
The 10.4% growth in membership fee income, combined with strong renewal rates of 92.7% in the U.S. and Canada, demonstrates the continued value that members place on Costco’s offerings.
The company’s expansion plans remain intact with 27 new warehouse openings planned for fiscal 2025, indicating confidence in long-term growth prospects despite near-term headwinds.
Strong performance in both domestic and international markets, with comparable sales growth in all international countries, reinforces Costco’s global resilience.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
