Costco Wholesale Corporation COST closed fiscal 2026 with management emphasizing warehouse expansion, deeper member engagement and digital growth as key priorities for the year ahead. The company plans to accelerate openings while continuing investments in supply chain capacity and member value.
The company reported fiscal fourth-quarter adjusted earnings per share of $6.60, which topped the Zacks Consensus Estimate of $6.48. Total revenues of $95.72 billion surpassed the consensus mark of $94.82 billion.
Costco Wholesale Corporation Price, Consensus and EPS Surprise
Costco Wholesale Corporation price-consensus-eps-surprise-chart | Costco Wholesale Corporation Quote
COST Sets a Higher Warehouse Growth Target
President and CEO Ron Vachris said that Costco opened 25 net new warehouses in fiscal 2026, bringing the worldwide total to 939. Management plans 33 openings in fiscal 2027, including five relocations, as it works toward 30 net new warehouses annually.
Expansion opportunities include new and existing U.S. markets alongside international growth. Fiscal 2027 plans include four buildings in Europe, five in Canada and one in Mexico, with additional Asian and Australian locations in the fiscal 2028 pipeline.
CFO Gary Millerchip said that Costco sees a five-to-10-year path for maintaining the 30-new-warehouse annual target. Fiscal 2027 capital expenditures are expected to be approximately $7.5 billion, up from $6.4 billion in fiscal 2026, reflecting warehouse and supply-chain investment.
Costco Sees Quality in Membership Trends
Membership remained a major Q&A focus. Costco ended the quarter with 84.1 million paid members, up 3.8% year over year, while paid executive memberships rose 9.4% to 42.3 million.
A Morgan Stanley analyst questioned the narrowing spread between membership and unit growth. Millerchip pointed to continued growth in new sign-ups, record executive-member penetration and improving renewal rates as indicators of member engagement.
A Truist analyst also pressed management on slowing membership growth. Millerchip characterized recent growth rates as more representative of current trends, while noting that future Asian openings could periodically produce outsized membership gains.
COST Leans Into Younger, Digital Members
Vachris said that Costco’s member base under age 40 has grown nearly 60% since COVID and now represents more than one-quarter of total membership. Management said that these customers initially spend less but increase spending as households and incomes mature.
Digitally enabled sales exceeded $33 billion in fiscal 2026 and increased more than 20%. Costco also expanded its Uber Eats relationship nationwide and broadened its DoorDash partnership in the United States.
Millerchip said that third-party delivery has generally generated incremental shopping occasions rather than displacing warehouse trips. Management also reported that traffic from AI searches grew at a triple-digit rate for the second consecutive quarter, albeit from a low base.
Costco Keeps Value at the Center of Pricing
Tariff refunds created another important theme. Costco received $184 million in fiscal fourth-quarter refunds and interest, representing slightly more than one-third of expected refunds.
Millerchip said that Costco had already received a similar amount in the first quarter of fiscal 2027. Management intends to reinvest the majority of refund dollars into increased member value.
That approach included price reductions across produce, meat, beverages and selected nonfood merchandise. Management framed the reinvestment as consistent with Costco’s broader strategy of using lower costs and efficiencies to support member value.
COST Balances Inflation and Margin Pressures
Reported gross margin declined 11 basis points year over year to 11.02%, although it increased 20 basis points excluding gas inflation. Core-on-core margins, excluding tariff refunds and reinvestment, improved across fresh, nonfoods and food and sundries.
Inflation remained in the low-single digits. Millerchip highlighted higher memory costs in consumer electronics and petroleum-related pressures, while food and fresh trends remained broadly consistent with recent quarters.
SG&A improved 27 basis points to 8.94%. In response to a Bank of America analyst, Millerchip said that general liability and health-care costs remained pressure points, but management did not identify a new major obstacle to continued expense leverage at comparable-sales growth around 6%.
Costco’s Priorities Heading Into Fiscal 2027
Management’s posture centered on expanding physical capacity while increasing engagement across digital, delivery, pharmacy, gas and other services. Costco also plans continued supply-chain spending to support warehouse and e-commerce growth.
Theearnings callalso showed continued attention to membership quality rather than membership growth alone, with executive penetration, renewal rates, digital engagement and spending per member central to management’s framework for fiscal 2027.
What COST’s Zacks Signals Indicate
COST currently carries a Zacks Rank #3 (Hold), alongside a Value Score of D, a Growth Score of B, a Momentum Score of C and a VGM Score of C. The Style Scores rank stocks from A through F, with A and B representing the stronger grades. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Growth Score is therefore COST’s strongest individual style signal, while its Value Score is weaker and Momentum and VGM readings sit in the middle. The Zacks Rank indicates a Hold designation, and the Rank can change as earnings estimates are revised following the just-reported results.
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This article originally published on Zacks Investment Research (zacks.com).
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