Have you ever walked out of Costco feeling like you just won at life? That mountain of groceries, the $1.50 hot dog reward, and somehow you still spent less than you feared? Yeah, me too. And apparently, millions of Americans feel exactly the same way right now – because the latest numbers show Costco isn’t just surviving in this weird economy. It’s absolutely thriving.
Thursday after the bell, the warehouse giant dropped its fiscal first quarter results for 2026, and let’s just say Wall Street wasn’t ready. Once again, Costco reminded everyone why it’s the undisputed king of retail resilience. The numbers weren’t just good – they were the kind that make investors sit up straighter.
Another Textbook Beat – But This One Felt Different
Here’s the headline everyone’s talking about: Costco delivered $4.50 in adjusted earnings per share against expectations of $4.27. That might look like a modest 23-cent beat, but when you’re moving billions, every penny counts. Revenue clocked in at $67.31 billion, edging past the $67.14 billion consensus. Small beats? Sure. But consistent beats, quarter after quarter, decade after decade – that’s the Costco way.
Total sales jumped 8.2% year-over-year, which is wild when you remember inflation has cooled and consumers are supposedly “trading down.” Apparently, trading down still means flocking to Costco. The real eye-popper, though, was ecommerce: online sales surged 20.5%. Twenty point five. In a quarter that included Black Friday. That’s not growth – that’s domination.
Breaking Down the Comparable Sales Story
Comparable sales – the metric that strips out new stores and currency swings – rose 5.9% in the U.S. and 6.4% globally. Those are stellar numbers for a retailer of Costco’s size. Think about it: they’re growing same-store sales faster than most “growth” companies grow total revenue.
- U.S. comps: +5.9%
- Canada: +7.1%
- Other international: +9.8%
- E-commerce: +20.5%
That international number deserves a second look. Double-digit comp growth outside North America shows the Costco model travels incredibly well. From Tokyo to Reykjavik, people want bulk toilet paper and rotisserie chickens at unbeatable prices.
The Membership Fee Hike Is Working Beautifully
Remember the drama last year when Costco finally raised fees for the first time since 2017? Gold Star and Business members now pay $65 (up from $60), while Executive jumped to $130 from $120. Management promised the increase would roll in gradually as memberships renewed.
Well, guess what? That gradual rollout is now in full swing, and it’s padding the top line in the best possible way. Renewal rates remain absurdly high – typically north of 90% – which means most members shrugged, paid the extra five or ten bucks, and kept shopping. In my view, that’s the ultimate vote of confidence.
The membership model isn’t just clever – it’s bulletproof. People don’t cancel Costco like they cancel streaming services. They cancel date night before they cancel Costco.
Younger Shoppers Are All In
One trend I find fascinating: Gen Z and millennials are signing up in droves. The treasure-hunt experience, the viral food court, the Instagram-worthy bulk finds – Costco has accidentally become cool. Management has openly talked about seeing younger demographics drive both membership growth and higher spending per visit.
This matters more than people realize. Capturing customers in their 20s and 30s means locking in decades of membership fees and shopping trips. It’s the ultimate annuity business disguised as a warehouse store.
The Tariff Elephant in the Room
Now, let’s talk about the one cloud on the horizon: tariffs. Roughly a third of Costco’s U.S. merchandise is imported, and new duties have already started hitting the bottom line. The company has been vocal – even taking legal action – to push back against certain tariff implementations.
During the last earnings call, the CFO explained they’re mitigating impact through smarter sourcing, leaning harder into Kirkland Signature products, and occasionally swapping SKUs to avoid the worst-hit categories. So far, it’s working. Gross margins actually expanded slightly this quarter, which is impressive under the circumstances.
Still, investors will be listening closely on today’s 5 p.m. ET call for any updated color on tariff exposure. This could be the one external factor capable of slowing the Costco freight train.
Valuation Reality Check
Costco closed Thursday at $884.48, down nearly 4% year-to-date while the S&P 500 is up 17%. That’s created what value hunters dream about: a premium stock trading at a relative discount.
Yes, the forward P/E sits around 45x – nosebleed territory for most companies. But Costco has earned that multiple through decades of consistent execution. Over the past five years, the stock is still up roughly 141%. The business throws off cash, raises its dividend reliably, and buys back shares when prudent.
In my experience watching retail for years, you don’t bet against companies that make customers feel smarter every time they shop. And right now, Costco is making an awful lot of people feel very smart indeed.
What Comes Next?
The company still refuses to give formal guidance – classic Costco humility – but the setup looks strong heading into calendar 2026. Holiday momentum appears solid, January renewal season will bring another wave of higher fees, and new club openings continue at a steady pace.
Perhaps the most interesting question isn’t whether Costco can keep growing – history says yes – but whether the market finally rewards that growth with multiple expansion. After underperforming broader indices this year, a catch-up trade feels increasingly likely.
Bottom line: if you’ve ever hesitated adding Costco to your portfolio because “it’s too expensive,” this quarter’s results are another reminder that quality compounders rarely go on sale… but sometimes they go on relative sale.
And in this market? That might be close enough.
