Costco Wholesale Corporation - Q3 FY2026 Earnings Analysis

Performance Highlights

Costco reported Q3 FY2026 net sales of $69.2 billion, up 11.6% year over year, with comparable sales rising 9.8% and 6.6% on an adjusted basis excluding gas inflation and foreign exchange. Diluted EPS of $4.93 climbed 15% from $4.28 in the prior-year period, beating consensus expectations, while membership fee income grew 10.7% to $1.37 billion.

Record-breaking gas volumes were the single most important operating driver in the quarter, with all three fiscal periods setting successive all-time company volume records and the final five weeks becoming the top five volume weeks in company history. Digitally enabled comparable sales surged 21.5%, pharmacy delivered significant market share gains aided by GLP-1 demand and Wegovy and Ozempic inclusion, non-foods comps rose high single digits led by gold and jewelry and health and beauty, and fresh comps grew high single digits led by meat and bakery.

Management Outlook and Forward Catalysts

Management reaffirmed its target of 30-plus net new warehouse openings annually in coming years, though FY2026 guidance was trimmed to 26 openings from 28, with two buildings deferred to FY2027, signaling a measured but durable expansion phase. Capital expenditure guidance for the full year was set at approximately $6.5 billion, reflecting accelerated investment in new warehouses, depot expansion, digital capabilities, and manufacturing for Kirkland Signature growth.

The central investor debate heading into Q4 centers on whether Costco can sustain its 6% to 7% core comparable sales trajectory as it laps outsized gas volumes and prior-year membership growth tailwinds, while managing rising healthcare costs, potential nonfood inflation from elevated resin prices, and ongoing tariff uncertainty that could pressure gross margins if refund recoveries are delayed or reduced.