Costco Reports Strong Q4 Earnings Growth
Costco Wholesale Corporation announced robust fourth-quarter earnings for fiscal 2025, with net sales rising 7.3% to $79.1 billion, surpassing expectations amid resilient consumer spending. The retailer also reported a membership fee increase that boosted revenue, though it faced pressures from e-commerce competition. This performance underscores Costco's enduring appeal in a challenging retail environment.
Timeline of Events
Costco's fiscal fourth quarter concluded on September 1, 2025, with earnings released after market close on September 25, 2025. The announcement followed a period of speculation, as the company had raised membership fees earlier in the year—effective September 1, 2025—for the first time since 2017. Shares reacted positively in after-hours trading, reflecting investor confidence in the retailer's strategy.
Detailed Reporting
During the earnings call, Costco's CFO Richard Galanti highlighted key drivers. "Our comparable sales growth of 5.4% demonstrates the strength of our value proposition, even as inflation moderates," Galanti said. He noted that the membership fee hike, from $60 to $65 for basic members and $120 to $130 for executive ones, contributed an additional $200 million in revenue for the quarter.
The company reported earnings per share of $5.29, beating estimates of $5.08, driven by strong performance in categories like groceries and electronics. However, gas sales were a drag due to lower fuel prices, and international operations saw mixed results with gains in Canada offset by currency fluctuations in Asia. Analysts from Jefferies praised Costco's e-commerce growth, which surged 18%, though it still lags behind rivals like Amazon and Walmart.
Providing background, Costco, based in Issaquah, Washington, operates over 800 warehouses globally and has built its model on bulk sales and low margins. Founded in 1983, it has weathered economic downturns by focusing on essentials, but recent years have seen increased competition from online giants. The fee increase was anticipated since announcements in July 2025, aimed at funding expansions like new warehouses and digital enhancements.
Eyewitness perspectives include a store manager in Seattle, who told reporters, "Customers are loyal because of the quality and prices; the fee bump hasn't deterred our regulars." Conversely, some shoppers expressed frustration on social media, with one user stating, "It's getting expensive, but the savings still make it worth it."
Implications and Potential Impacts
Economically, Costco's results suggest consumer resilience despite high interest rates, potentially influencing Federal Reserve policy on inflation. The fee increase could set a trend for membership-based retailers, impacting household budgets. Societally, it highlights income disparities, as bulk buying favors higher-income families. On a broader scale, strong earnings may encourage retail investments, but ongoing e-commerce pressures could force further innovations, affecting employment in physical stores. If trends continue, Costco might expand its online presence, reshaping the retail landscape.