Costco Wholesale reported total revenue of $70.53 billion for its fiscal 2026 third quarter, marking an 11.6% increase year over year and surpassing Wall Street's expectations of $69.81 billion. Adjusted earnings per share rose 15.2% to $4.93, aligning with forecasts. Membership fee income also grew, reaching $1.37 billion, slightly above the anticipated $1.36 billion.
The U.S./Canada membership renewal rate improved to 92.2%, indicating stability despite a slight decline in overall paid memberships, which totaled 82.9 million, a 4.1% year-over-year increase. Traffic growth slowed, but the average ticket size increased, reflecting consumers' continued preference for Costco's value offerings.
CEO Ron Vachris highlighted record gas sales, driven by high prices due to supply disruptions, which attracted new members and encouraged additional shopping at warehouse locations. Comparable sales rose 9.8%, with a notable 21.5% increase in digitally-enabled sales. However, adjusted comparable sales growth decelerated to 6.6%.
Costco's gross margin contracted slightly, but operating margins improved. The company opened four new warehouses in the quarter and plans to open 12 more, although total openings for the year have been reduced from 28 to 26. Costco's focus on value has positioned it well in a high-inflation environment, maintaining its reputation as a leading retailer.
Despite the mixed results, analysts maintain a hold-equivalent rating and a price target of $1,100 per share, reflecting cautious optimism about Costco's future performance