Have you ever watched a stock that seems stuck in neutral for months suddenly roar back to life? That’s exactly what happened this week with one of the biggest names in retail. After a surprisingly flat performance through much of last year, fresh numbers came in that changed the conversation overnight.
It’s moments like these that remind me why I love following the markets. One solid report can shift sentiment in an instant, turning skeptics into believers. And right now, there’s a lot of renewed excitement building around this particular company.
A Welcome Breakout After Months of Pressure
The numbers that dropped late Wednesday were genuinely impressive. Comparable sales in the U.S., once you strip out the noise from currency swings and gasoline prices, climbed a robust 6.3% over the five-week holiday period. That’s not just good—it’s substantially better than what most on Wall Street were expecting.
In fact, it blew past the consensus estimate by a wide margin. More importantly, it showed clear acceleration from the previous month’s reading. When you see that kind of sequential improvement during the crucial holiday stretch, it tends to get people’s attention.
The market’s reaction was immediate and decisive. Shares opened sharply higher the next morning and held onto most of those gains through the session. It was the kind of move that suggests investors had been waiting for an excuse to jump back in.
Putting Last Year’s Concerns in the Rearview
Let’s be honest—2025 wasn’t exactly kind to this stock. Despite solid underlying business trends, shares actually ended the year in negative territory. A lot of that had to do with worries about valuation. When something trades at a premium multiple for long enough, eventually people start asking whether it’s still justified.
There were also questions around membership renewal rates dipping slightly and whether traffic growth was cooling. Combine that with broader concerns about consumer spending power, and you had a recipe for caution.
But here’s what I’ve noticed over the years: strong operators tend to find ways to work through temporary headwinds. The core model remained intact—high renewal rates, loyal customers, and that unique ability to drive bigger basket sizes. It just needed a catalyst to remind everyone.
That catalyst appears to have arrived.
Strength Across the Board
One of the most encouraging aspects of the latest report was how broad-based the gains were. Fresh foods, always a key traffic driver, posted high single-digit growth. That’s a meaningful step up from the prior period and the best showing in several months.
Non-foods categories held steady with mid-single digit advances, providing nice balance. Perhaps most telling was the jump in average transaction size. Shoppers weren’t just visiting more often—they were spending noticeably more per trip.
- Fresh foods: high single-digit comps
- Non-foods: mid-single digit growth
- Average transaction: up over 4%
- E-commerce: nearly 19% growth
Seeing that kind of spending behavior during the holidays isn’t surprising in itself, but the magnitude definitely stood out. It suggests pricing power remains firmly in place and customers continue to view the warehouse as a go-to destination for value.
The Digital Piece of the Puzzle
Of course, no discussion of modern retail would be complete without talking about online trends. Here the growth was solid—almost 19% year-over-year—but clearly moderating from the explosive rates seen in prior years.
Some might look at that deceleration and worry. I tend to see it differently. Coming off such elevated comparisons, maintaining double-digit gains still demonstrates meaningful progress. Plus, the overall business isn’t nearly as dependent on digital penetration as pure-play e-commerce names.
More importantly, management has consistently shown willingness to invest in the online experience when needed. Given the incredibly sticky membership base—renewals still comfortably above 90%—there’s plenty of runway to drive further adoption over time.
The combination of physical and digital channels creates a powerful moat that’s hard to replicate.
Looking Ahead to the Rest of Fiscal 2026
With roughly half the second quarter now in the books, analysts are already adjusting their models higher. Early reads suggest the period is tracking ahead of previous expectations, which could set up for another positive surprise when full results arrive in early March.
There are a couple of additional data points coming soon that should provide more clarity. An investor update mid-month and the next monthly sales release in early February will give everyone fresh ammunition—either for the bulls or the remaining bears.
Personally, I suspect they’ll largely reinforce the improving trend. The holiday momentum often carries into January as consumers tackle organization projects and stock up after the gift-giving frenzy.
Relative Performance Considerations
It’s worth noting how this name stacked up against peers last year. While one major competitor delivered strong gains throughout 2025, Costco notably lagged. That divergence created opportunities for relative value traders and probably contributed to some of the frustration among long-term holders.
But markets have a way of correcting excesses over time. If the underlying fundamentals continue to reaccelerate—as the latest report suggests—it’s reasonable to expect some catch-up potential. After all, both companies operate highly successful models, just with different emphases.
The membership-driven approach has proven remarkably resilient through various economic cycles. That consistency deserves recognition, especially when execution remains this sharp.
Valuation in Context
Naturally, the valuation debate will continue. Trading at a premium to broader retail isn’t new for this company—it’s earned that multiple through decades of superior returns on capital and predictable growth.
The question is always whether current levels appropriately reflect future prospects. With evidence mounting that growth is reaccelerating and margins remain healthy, the risk/reward skews more favorably than it did just a few weeks ago.
Of course, nothing moves in a straight line. There will be volatility along the way, and external factors like interest rates or consumer confidence can always intervene. But the underlying story appears to be strengthening at exactly the moment when many had grown most skeptical.
What This Means for Investors
For anyone sitting on the sidelines waiting for confirmation, this report provided it in spades. The combination of better-than-expected comps, broad category strength, and accelerating transactions paints a picture of a business hitting its stride.
Long-term holders who weathered last year’s underperformance are likely feeling vindicated. Those who trimmed positions on weakness might now be reconsidering. And new investors finally have concrete evidence to support stepping in.
In my experience, these kinds of inflection points—when solid numbers challenge a prevailing negative narrative—often mark important turning points. Whether this proves to be the start of a sustained move higher remains to be seen, but the early evidence is certainly encouraging.
At minimum, the stock has reclaimed some important technical levels and recaptured investor attention. From here, continued operational execution will determine how far the recovery can run.
Retail remains a dynamic and competitive space, but certain models have proven more durable than others. When a proven winner shows signs of regaining momentum, it’s usually worth paying attention.
The latest sales report wasn’t just good—it was the kind of standout performance that can change minds. And in markets, changing minds is often what drives prices higher.
Whether you’re already invested or still evaluating, the story bears watching closely in the coming weeks. The next chapters could prove particularly interesting.
