The sign on the side of a Costco is seen in Hawthorne, California, on April 4, 2025.
Jay L Clendenin | Getty Images
Shares of Costco fell slightly on Thursday, despite the warehouse club posting quarterly earnings and revenue that topped estimates and reporting 8% year-over-year sales gains.
Unlike many retailers, Costco does not provide an annual outlook. Yet the company’s leaders said on an earnings call that tariffs have brought higher costs and other challenges, forcing Costco to tweak its supply chain and in certain cases, raise prices.
Here’s how the warehouse club retailer did in its fiscal third quarter compared with what Wall Street was expecting, based on a survey of analysts by LSEG:
- Earnings per share: $4.28 vs. $4.24 expected
- Revenue: $63.21 billion vs. $63.19 billion expected
Costco’s net income for the three-month period that ended May 11 rose to $1.90 billion, or $4.28 per share, compared with $1.68 billion, or $3.78 a year earlier. Revenue rose from $58.52 billion in the year-ago period.
Comparable sales, an industry metric that takes out one-time factors such as store openings and closures, rose 8%, and e-commerce sales rose nearly 16% compared with the year-ago period, excluding gas and the impact of changes to foreign exchange.
As tariffs raise economic worries, and potentially consumer prices, Costco could stand to benefit. Unpredictable tariff policy could help drive more customers to the warehouse club, which is known for its competitive prices and bulk discounts, and encourage them to renew membership. Its clubs also sell discounted gas and groceries, which are steadier traffic drivers even when consumers pull back on spending. And compared with some other retailers, Costco has a stronger hand in price negotiations with suppliers because of its large size.
About a third of Costco’s U.S. sales are goods brought in from other countries, CFO Gary Millerchip said on the company’s earnings call. He said items imported from China represent about 8% of total US sales.
Some retailers have already warned that higher tariffs will mean higher prices. Best Buy CEO Corie Barry said Thursday that the retailer had already raised prices on some consumer electronics because of tariffs. Cosmetics company E.l.f. Beauty announced a price increase on its makeup last week. And Walmart CFO John David Rainey warned earlier this month that higher prices were coming to the discounter’s stores and website in late May or June.
On the company’s earnings call, CEO Ron Vachris said Costco has looked for ways to reduce tariff costs while keeping prices low. He said its buyers rushed orders to get them to the U.S. ahead of tariffs. It has rerouted goods from countries with higher tariffs to non-U.S. markets. And it’s sourced more items for its private brand, Kirkland Signature, in the countries or regions where the items are sold.
Even with tariffs, he said, Costco has lowered the price of some items including eggs, butter and olive oil. He said it’s also trying to lean into reasons that customers might sign up for or renew membership, such as extending the hours of its gas stations that sell discounted fuel.
Compared to other retailers, Costco sells a slimmer variety of items like having fewer different brands of peanut butter or diapers. Millerchip said that limited approach means Costco is a bigger buyer and can work more closely with suppliers on pricing. He said Costco can also rotate to other items, if needed.
In some cases, Costco has absorbed tariff-related cost differences and in other cases, it has raised prices, Millerchip said. For example, the retailer decided to hold the line on the price of pineapples and bananas from Central and South America because they are staple items for shoppers, he said.
“We felt it was important to to really eliminate the impact there for the member by working with our suppliers and by us finding efficiencies and accepting that there may be a margin impact,” he said.
On the other hand, he said, it decided to increase the price for flowers from Central and South America since those are more discretionary items.
As of Thursday’s close, shares of Costco are up about 10% so far this year. That has outpaced the S&P 500’s less than 1% gains during the same period.
