Key Takeaways
- Second quarter earnings per share reached $4.58, surpassing the analyst estimate of $4.55; total revenue of $69.6 billion exceeded the $69.3 billion forecast
- Same-store sales increased 7.4%, while digital-enabled comparable sales skyrocketed 22.6%
- Net earnings jumped almost 14% compared to the prior year, reaching $2.035 billion
- Revenue from membership fees increased 13.6% to $1.355 billion; paying membership base grew to 82.1 million
- COST stock has gained 14% since the start of the year but declined 0.2% during premarket hours following the earnings release
The warehouse retail giant reported impressive fiscal Q2 2026 results that exceeded Wall Street’s projections on nearly all fronts. Net earnings advanced almost 14% year-over-year to reach $2.035 billion, translating to $4.58 per diluted share and outperforming the consensus forecast of $4.55.
Total revenue registered at $69.6 billion, modestly beating the anticipated $69.3 billion figure. Same-store sales climbed 7.4% in aggregate, or 6.7% when adjusted for gasoline price fluctuations and currency exchange impacts.
This represents an acceleration from the prior quarter ending in December, when adjusted comparable sales grew 6.4%. Monthly tracking data reveals strengthening momentum — comparable sales increased 7% during December, 7.1% in January, and 7.9% throughout February.
Costco Wholesale Corporation, COST
The company’s digital operations delivered exceptional performance. Online-enabled comparable sales surged 22.6%, supported by website traffic climbing 32% and mobile app engagement rising 45% during the quarter. Personalized recommendation features alone generated more than $470 million in digital commerce revenue.
COST stock traded down 0.2% in Friday’s premarket session following the earnings announcement, although shares maintain a 14% gain year-to-date — positioning the stock to erase all of last year’s declines.
Membership Revenue and Profitability Remain Robust
Revenue generated from membership fees climbed 13.6% year-over-year to reach $1.355 billion. Approximately one-third of this expansion stemmed from the membership fee increase implemented in September 2024 across U.S. and Canadian locations. Even excluding the fee adjustment and foreign exchange effects, membership revenue still expanded 7.5%.
The total paying member count reached 82.1 million, representing a 4.8% increase versus the prior year. Executive-level memberships hit 40.4 million, climbing 9.5%. The global renewal rate remained stable at 89.7%, matching the previous quarter.
Renewal rates in the U.S. and Canada decreased by 10 basis points sequentially to 92.1%, a shift management attributed to online membership acquisitions — which historically convert at marginally lower rates than in-store signups.
Gross profit margin expanded to 11.02% from 10.85% in the year-ago period. Core-on-core margins improved by 22 basis points, with advances across food, non-food, and fresh merchandise segments. Selling, general and administrative expenses ticked up modestly to 9.19% of sales versus 9.06% previously, partially reflecting higher general liability reserve allocations.
Tariff Dynamics, Store Growth, and Forward Outlook
CEO Ron Vachris characterized the tariff environment as “extremely fluid.” Recently eliminated IEEPA tariffs have been supplanted by new global tariff structures for at least the coming 150 days. Costco initiated legal action through the Court of International Trade to preserve its eligibility for refunds should those tariffs be invalidated — which occurred in February.
Vachris noted the retailer did not transfer complete tariff expenses to members in numerous instances. Should refunds materialize, management intends to deliver value back through reduced pricing and enhanced promotional offerings. The company has already reduced prices on eggs, cheese, coffee, select paper goods, and certain tariff-impacted merchandise including textiles and cookware.
The retailer concluded the quarter operating 924 warehouse locations globally. Management anticipates 28 net new location openings throughout fiscal 2026 and targets 30-plus new store openings annually moving forward. Full-year capital expenditure is projected at approximately $6.5 billion.
For the month of February, net sales totaled $21.69 billion, advancing 9.5% year-over-year. Total comparable sales rose 7.9% for the month (7.0% on an adjusted basis). Digital-enabled sales climbed 21.8%.
No special dividend distribution was declared. The board indicated it would maintain ongoing evaluation of this possibility, though no announcements were made at this juncture.
