Costco Wholesale delivered a resilient QQ3 2025 performance with a reported revenue of $63.205 billion, up 8.02% year-over-year and a slight QoQ decline of 0.81%. The gross profit totaled $8.209 billion, yielding a gross margin of approximately 12.99%, with operating income of $2.53 billion and an operating margin near 4.00%. Net income was $1.903 billion and earnings per diluted share $4.28–$4.29, reflecting a double-digit percentage improvement versus the prior-year period. The quarter benefited from steady traffic, favorable product mix, and ongoing productivity initiatives that supported earnings growth despite modest sequential topline pressure.
Costco’s balance sheet remains highly robust. Total assets stand at $75.48 billion against $48.36 billion in liabilities and $27.13 billion in shareholders’ equity, yielding a liquidity profile underpinned by $13.84 billion in cash and equivalents and $1.01 billion in short-term investments (cash and short-term investments of $14.85 billion). Net debt is negative (net cash) at approximately $(5.66) billion, reflecting substantial liquidity to fund capex, dividends, and potentially selective share repurchases. Free cash flow for the period was $2.329 billion, supported by operating cash flow of $3.46 billion and capital expenditures of $1.131 billion. Management’s disciplined capital allocation, including a $0.211 billion net share repurchase and $0.515 billion in dividends, reinforces Costco’s ability to return capital while maintaining a strong balance sheet.
Looking forward, the company benefits from a persistent membership-driven model, ongoing cost-control measures, and the potential for continued strength in non-food categories and international markets. However, near-term inputs such as wage costs, currency effects in international operations, and broader macro consumer demand will influence margin trajectory and growth rates. Overall, Costco’s QQ3 2025 results reinforce its position as a cash-flow-generative, defensively positioned retailer with ample financial flexibility to invest in growth and return capital to shareholders.
Cash Flow and Balance Sheet
- Operating Cash Flow: $3.46B; Free Cash Flow: $2.329B
- Capital Expenditures: $1.131B; Dividends Paid: $0.515B; Purchases of Treasury Stock: $(0.211)B
- Net Change in Cash: $1.48B; Cash at End of Period: $13.836B
- Net Debt: Negative $5.656B (net cash)
- Total Assets: $75.482B; Total Liabilities: $48.357B; Total Stockholders’ Equity: $27.125B
- Working Capital and Liquidity: Total Current Assets $38.151B; Total Current Liabilities $37.579B; Inventory $18.606B
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
63.21B
8.02%
-0.81%
Gross Profit
8.21B
11.81%
2.88%
Operating Income
2.53B
15.16%
9.24%
Net Income
1.90B
13.21%
6.43%
EPS
4.29
13.19%
6.45%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
No earnings call transcript data provided in the input. As a result, transcript-based highlights and management quotes could not be extracted from the provided material.
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Forward Guidance
There is no explicit forward guidance disclosed in the provided data for QQ3 2025. Given Costco’s historically conservative and capital-return focused stance, investors should monitor: (i) membership renewal/retention and new member sign-ups, (ii) traffic trends and basket sizes across US and international markets, (iii) cost structure evolution including wage scale, supply chain efficiencies, and inflation pass-through, and (iv) ongoing online and omnichannel execution. In a base-case scenario, expect continued mid-single-digit revenue growth with stable to modest margin expansion driven by scale efficiencies and productivity gains; risks to this outlook include macro consumer weakness, currency volatility, and competitive pricing pressure in international markets.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
0I47.L Focus
12.99%
N/A
N/A
N/A
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Baseline assessment indicates Costco remains a defensively positioned compounder with durable cash flow, strong liquidity, and a track record of capital allocation that supports shareholder returns. The QQ3 2025 results show solid revenue growth, margin discipline, and robust free cash flow generation, reinforcing Costco’s strategic advantage in membership-driven retail. The stock should benefit from continued membership growth, international expansion opportunities, and ongoing private-label margin benefits. Key uncertainties include macro consumer dynamics, currency movements in non-US markets, and competitive pressure. Investors should monitor membership trends, traffic patterns, cost control efficiency, and the pace of international expansion as primary indicators of the medium-term trajectory.
Key Investment Factors
Growth Potential
Sustained membership growth and high renewal rates; expansion in international markets (where Costco has a smaller footprint relative to the US) and continued expansion of e-commerce and omnichannel capabilities; potential upside from Kirkland private-label margin enhancement and supplier negotiations that support margin resilience amid inflationary pressures.
Profitability Risk
Macro consumer downturn and discretionary spend softness; currency translations impacting non-US operations; competitive intensity from peers (Walmart, Amazon) and regional retailers; supply chain disruptions or commodity cost volatility that could pressure margins; regulatory and trade policy changes affecting international operations.
Financial Position
Strong liquidity position with net cash, ample quarterly free cash flow, and a robust balance sheet capable of funding capex, dividends, and selective share repurchases. The balance sheet supports a flexible capital-allocation framework and potential strategic investments or international expansion.
SWOT Analysis
Strengths
Scale advantages and cost leadership in the discount retail space drive robust cash generation.
Membership model with high renewal rates supports predictable, recurring demand and durable cash flows.
Strong balance sheet with a net cash position enables aggressive capital allocation, dividends, and buybacks.
Kirkland Signature private-label offerings enhance margin stability and basket size.
Global footprint provides diversified revenue streams and price-insensitive consumer segments.
Weaknesses
Low gross margins relative to some peers due to business model and product mix.
International operations carry currency and regulatory risks, and expansion requires significant localization.
High reliance on warehouse-based logistics may face cost pressure from labor and energy costs.
Opportunities
Further international expansion and e-commerce penetration could unlock incremental sales and margin opportunities.
Private-label growth could sustain or expand gross margins and improve customer loyalty.
Enhanced data analytics and loyalty programs to drive basket growth and cross-category purchases.
Threats
Macro economic slowdowns and consumer spending weakness could temper top-line growth.
Competitive pressure from Walmart, Amazon, and regional retailers could compress margins and market share.
Supply chain disruptions and inflation volatility, including wage and fuel costs, pose ongoing risks.