There is a particular kind of American ritual that happens on a Saturday morning in a Costco parking lot. Families arrive with a list and a plan, and leave with a cart full of rotisserie chickens, a television they did not plan to buy, and the quiet satisfaction of having outsmarted inflation for one more week. On Thursday, September 24, Costco Wholesale showed Wall Street exactly how powerful that ritual has become.
The numbers were strong across the board. For its fiscal fourth quarter, the 16 weeks ended August 30, Costco posted net income of $2.998 billion, or $6.75 per diluted share, up from $2.610 billion, or $5.87, a year earlier, according to the company’s official results. Total revenue hit $95.72 billion, beating the FactSet consensus of $94.97 billion, and earnings beat the expected $6.54 per share, per Dow Jones Newswires via Morningstar.
But the headline numbers only tell half the story. Let me dissect what actually happened, because this quarter is a small masterclass in how a great retailer operates under pressure.
The tariff refund windfall. Buried in the results was a genuinely unusual item: a non-recurring benefit of $0.15 per diluted share from tariff refunds under the International Emergency Economic Powers Act, Costco disclosed. The company received $184 million in refunds during the quarter, roughly one-third of the total it expects, and it reinvested the majority of that money into lower prices for members rather than pocketing it. Excluding the refund, net income still rose a robust 12.3% and earnings per share 12.4%. A similar amount has already arrived in the first quarter of fiscal 2027.
Pause on that choice for a moment. Most companies, handed an unexpected $184 million, would let it flow to the bottom line and take the victory lap. Costco used it to cut prices. That is not charity. It is strategy. Every dollar of price reduction deepens the one thing Costco sells that no competitor can copy: the feeling that the membership card in your wallet is paying for itself.
The comps engine. Comparable sales rose 9.4% on a reported basis, or 6.7% excluding gasoline prices and currency swings. In the U.S., comps were up 10.7% reported and 7.2% adjusted. CFO Gary Millerchip noted that adjusted comps have sat in a 6% to 7% range for about a year, and the company feels good about the trajectory, per Stocktwits’ earnings coverage. That steadiness is the point. Costco is not a boom-and-bust retailer. It is a compounding machine.
The membership moat. Membership fee revenue grew 7.3% to $1.85 billion. The worldwide renewal rate stood at 89.8%, with 92.3% in the U.S. and Canada. Executive membership penetration hit an all-time high of 42.3 million paid members, up 9.4%. Think about what those numbers mean in human terms: nearly nine out of ten members look at the annual fee, look at what they saved, and decide to stay. That is the strongest vote of confidence in American retail.
The gas station effect. Here is a detail that tells you everything about the current economy. Costco’s ancillary businesses posted high-twenties comparable sales growth, led by gasoline comps up in the mid-30s on record volumes. With the Iran conflict sending fuel prices soaring, drivers are going out of their way to fill up at Costco, where prices typically run below market, as Reuters reported. And once they are in the parking lot, they walk inside. The gas pump is the loss leader; the warehouse is the prize.
Digital is no longer an afterthought. Digitally-enabled sales grew 19.5% and now account for roughly 10% of total revenue. For a company built on the treasure-hunt experience of wandering enormous aisles, that is a meaningful second engine.
For the full fiscal year, the picture is just as impressive: net sales of $297.2 billion, up 10.1%, and net income of $9.226 billion, or $20.76 per share. The company now operates 939 warehouses worldwide and plans about 30 net new openings a year, backed by roughly $7.5 billion in fiscal 2027 capital expenditure.
So why did the stock trade flat after hours? Because expectations are a different game from results. Investors had questions about the pace of core sales growth once gas and currency are stripped out, and about whether membership growth is normalizing. When a company is this good for this long, the market stops rewarding excellence and starts demanding acceleration.
Here are the lessons I take from this quarter, and I offer them as a fellow observer of how money actually works in people’s lives.
First, Costco’s quarter is a real-time read on the American consumer. When management says inflation is running in the low single digits but calls out pressure in beef and petroleum-based products while eggs and dairy see deflation, that is the grocery economy in one sentence. Shoppers are consolidating trips, buying in bulk, and trading down to essentials. Costco wins in exactly that environment, because its entire model is built for the careful spender.
Second, the tariff refund episode is a case study in long-term thinking. Reinvesting a windfall into member value instead of quarterly earnings is the kind of decision that compounds over decades. It is also a reminder to check your own windfalls, a tax refund, a bonus, a rebate, with the same question: will spending this now make my future self better off, or just my present self feel richer?
Third, watch the moat, not the multiple. Costco’s stock is famously expensive by traditional measures. What you are really buying is the renewal rate, the foot traffic, the executive membership penetration. Those are the numbers that tell you whether the machine is still humming. This quarter, it is humming.
A warehouse full of bulk paper towels does not look like a masterclass in capitalism. But $95.7 billion in a single quarter, built one $60 membership at a time, suggests otherwise. In an economy where everyone feels squeezed, Costco has figured out how to be the place people run to, not from. That is worth studying, whether you own the stock or just the card.
