Executive Summary
Costco reported solid first quarter of fiscal 2025, with net sales of $62.151 billion and net income of $1.798 billion ($4.04 per diluted share), reflecting a 7.5% YoY topline increase and a 9.9% lift in net income ex discrete tax items. Total comparable sales rose 5.2% (7.1% adjusted for gas deflation and FX), with e-commerce comp up 13% (13.2% adjusted). Traffic growth remained robust at 5.1% worldwide (US 4.9%), while average ticket was essentially flat on a reported basis but up 2% excluding gas and FX effects. Membership metrics remained strong, with 77.4 million paid households and 36.4 million paid executive memberships, executives accounting for 46.8% of paid members and 73.1% of sales. The company continued to invest in capabilities and growth, opening seven warehouses in Q1 (six net), including four outside the US, and guiding toward approximately $5 billion of capital expenditures for the year and roughly 29 openings (26 net outside the US).
From a margin perspective, gross margin expanded 24 basis points YoY to 11.28%, driven by mix, Kirkland Signature improvements, and a favorable credit card co-brand program, while SG&A rose modestly as wage inflation took hold. Management highlighted ongoing price investments to defend value leadership, including notable Kirkland price reductions, and indicated ongoing investment in technology, payroll, and supply chain capabilities to support growth. The quarter benefited from a $100 million discrete tax item related to RSU vesting, which, when excluded, yields a tax rate around 26.5%. Cost control remained a focus as the company advances in its multi-year growth plan, including Costco Logistics and Costco Next, as well as early-stage retail media initiatives.
Looking ahead, COST emphasizes continued expansion (US and international), a continued emphasis on value via price leadership and Kirkland Signature, and monetization opportunities from digital channels (e-commerce, Costco Logistics, retail media). Management also noted macro headwinds such as gas price deflation and FX, potential port-related disruptions, and tariff uncertainty, which could influence quarterly results. Overall, the balance sheet remains strong with $10.9 billion of cash and equivalents, a net cash position of approximately $2.87 billion, and a solid free cash flow trajectory that supports ongoing expansion and shareholder returns.
Key Performance Indicators
QoQ: -27.81% | YoY:10.69%
QoQ: -23.62% | YoY:13.15%
QoQ: -23.58% | YoY:13.13%
Key Insights
Revenue: $62.151B in Q1 FY2025, up 7.5% YoY; Cost of revenue: $54.109B; Gross profit: $8.042B; Gross margin: 11.28% (YoY up 24 bps; ex gas deflation up 7 bps); Operating income: $2.196B; Operating margin: 3.53% (YoY up 10.69%, QoQ down ~27.8%); Net income: $1.798B; Net income margin: 2.89% (YoY up ~13.15%, QoQ down ~23.6%); Diluted EPS: $4.04; Equity base: 444.0M weighted shares; YoY metrics reflect discrete tax items: $100M RSU vesting benefit; Excluding items, net income and EPS rose ~9.9% and...
Financial Highlights
Revenue: $62.151B in Q1 FY2025, up 7.5% YoY; Cost of revenue: $54.109B; Gross profit: $8.042B; Gross margin: 11.28% (YoY up 24 bps; ex gas deflation up 7 bps); Operating income: $2.196B; Operating margin: 3.53% (YoY up 10.69%, QoQ down ~27.8%); Net income: $1.798B; Net income margin: 2.89% (YoY up ~13.15%, QoQ down ~23.6%); Diluted EPS: $4.04; Equity base: 444.0M weighted shares; YoY metrics reflect discrete tax items: $100M RSU vesting benefit; Excluding items, net income and EPS rose ~9.9% and ~9.8%.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
62.15B |
7.53% |
-22.02% |
| Gross Profit |
8.04B |
9.53% |
-20.45% |
| Operating Income |
2.20B |
10.69% |
-27.81% |
| Net Income |
1.80B |
13.15% |
-23.62% |
| EPS |
4.05 |
13.13% |
-23.58% |
Key Financial Ratios
operatingProfitMargin
3.53%
operatingCashFlowPerShare
$7.34
freeCashFlowPerShare
$4.5
dividendPayoutRatio
28.6%
Management Commentary
Strategic growth and value proposition: Management emphasized that members prize a combination of newness, quality, and value, and that Costco merchants have been successful at delivering this mix across categories. Digital channels are contributing meaningfully to growth, with e-commerce comp up 13% and US app downloads reaching ~42 million cumulatively. Operational momentum was underscored by seven warehouse openings in the quarter (six net), including four outside the US, with an anticipated 29 openings for FY2025 (26 net outside the US). Costco Logistics and Costco Next were highlighted as meaningful growth catalysts in the near term. Margin dynamics were discussed in detail: core gross margins rose, supported by mix and the credit-card co-brand program, while gas deflation remained a headwind. Management reiterated a holistic reinvestment philosophy (price, quality, IT, labor, Kirkland innovation) intended to boost member value and long-run profitability. In terms of capital allocation, the company expects full-year CapEx near $5B and noted a $1.26B spend in Q1, with ongoing investments in technology and distribution infrastructure. Notable management commentary on membership reflects a mix shift toward digital sign-ups, which slightly depress renewal rates in the near term but underpin robust member growth and future loyalty.
“the combination of newness of items, quality, and value are really important to the member.”
— Gary Millerchip
“retail media is in the early innings, but we believe it represents a significant growth opportunity in the future… we’re in the off-site journey with agencies, and there’s strong interest from suppliers.”
— Gary Millerchip
Forward Guidance
Growth trajectory and capital allocation plan remain oriented toward a multi-faceted expansion: 1) CapEx guidance of approximately $5 billion for the full year, with ~29 store openings (26 net outside the US) and continued investment in new growth warehouses (US and international). 2) E-commerce and logistics acceleration through Costco Logistics, Costco Next, and multi-channel fulfillment (including collaboration with Instacart and Uber). 3) Early-stage retail media monetization, with a first targeted campaign achieving two-to-three times the typical ROAS and a pipeline of >25 suppliers participating in off-site campaigns, signaling an incremental growth vector that should improve marketing efficiency over time. 4) Ongoing pricing discipline and Kirkland Signature innovations to sustain price leadership and member value. 5) Risks to watch include gas price volatility, FX headwinds, port strikes, tariffs, and evolving competitive dynamics; management indicated continued monitoring and adaptive sourcing, inventory planning, and SKU optimization to mitigate these risks. Investors should monitor: (i) membership renewal mix and online onboarding trends, (ii) progress on international club openings and related profitability, (iii) the trajectory of gross margin ex gas, (iv) advances in e-commerce penetration and the impact of new digital programs on traffic and cross-sell.