Executive Summary
Costco’s QQ3 2025 results delivered solid top-line momentum and a modest step up in gross margins despite ongoing inflation dynamics and tariff headwinds. Revenue reached $63.2 billion, up 8% year over year, while net income of $1.90 billion and diluted EPS of $4.28–$4.29 reflected stronger sales and favorable mix, offset by a $130 million LIFO charge and a $35 million FX translation impact. U.S. comps accelerated 6.6% (7.9% ex gas deflation), with total company comps at 5.7% (8% adjusted). E-commerce remained a bright spot, with online comps at ~15% growth (roughly 15.7% adjusted). Management emphasized continued value leadership through price investments, operational efficiency, and a more localized sourcing strategy to mitigate tariff exposure. Importantly, Costco remains focused on expanding membership value via new warehouses, technology pilots, and elevated gas-hour availability, while also advancing private-label penetration (Kirkland Signature) and e-commerce capabilities (Affirm BNPL). Cost control efforts benefited gross margins, though inflation and LIFO dynamics remain meaningful near term. The company projects capex of a little over $5 billion for the year and plans to add roughly 27 new warehouses in fiscal 2025, taking total warehouses to about 914. The near-term risks include tariff evolution, FX volatility, and potential LIFO-related margin pressure in Q4 if inflation persists. Overall, COST’s multi-channel strategy and disciplined capital allocation support a constructive long-term investment thesis, albeit with elevated near-term macro uncertainty.
Key Performance Indicators
QoQ: -14.61% | YoY:11.81%
Key Insights
Revenue: $63.205B in Q3 2025, up 8.0% YoY; Gross profit: $8.209B, gross margin 11.25% (up 41 bps YoY; +29 bps ex gas deflation); Operating income: $2.53B (OA margin ~4.00%); Net income: $1.903B; EPS (diluted): $4.28; Weighted avg shares: 444.0M. LIFO charge: $130M in Q3 (vs. $11M credit last year); FX impact: $35M (−$0.08 per diluted share). SG&A: 9.16% of sales (up ~20 bps YoY). Capex (Q3): $1.13B; full-year Capex guidance: ~ $5B. Total company comps: +5.7% (8% adjusted for FX and gas def...
Financial Highlights
Revenue: $63.205B in Q3 2025, up 8.0% YoY; Gross profit: $8.209B, gross margin 11.25% (up 41 bps YoY; +29 bps ex gas deflation); Operating income: $2.53B (OA margin ~4.00%); Net income: $1.903B; EPS (diluted): $4.28; Weighted avg shares: 444.0M. LIFO charge: $130M in Q3 (vs. $11M credit last year); FX impact: $35M (−$0.08 per diluted share). SG&A: 9.16% of sales (up ~20 bps YoY). Capex (Q3): $1.13B; full-year Capex guidance: ~ $5B. Total company comps: +5.7% (8% adjusted for FX and gas deflation); US comps: +6.6% (7.9% ex gas deflation); Canada comps: +2.9% (7.8% adj); Other international: +3.2% (8.5% adj); E-commerce comps: +14.8% (15.7% adj). Traffic: +5.2% globally; US: +5.5%; Avg ticket: +0.4% globally (+1.1% US); Adjusted ticket growth (net of gas FX): +2.7% globally; +2.3% US. Membership: Paid households 79.6M (+6.8% YoY); Cardholders 42.8M (+6.6% YoY); Executive members 37.6M (+9% YoY) representing 47.3% of paid members and 73.1% of worldwide sales. Membership income: $1.24B, +10.4% YoY; FX-adjusted growth +11.4%; Renewal rate: US+Canada 92.7%; Worldwide 90.2%; New digital memberships contributing to base with some renewal volatility due to recent digital campaigns.
Income Statement
| Metric |
Value |
YoY Change |
QoQ Change |
| Revenue |
63.21B |
8.02% |
-0.81% |
| Gross Profit |
8.21B |
11.81% |
-14.61% |
| Operating Income |
2.53B |
15.16% |
9.24% |
| Net Income |
1.90B |
13.21% |
6.43% |
| EPS |
4.29 |
13.19% |
6.45% |
Management Commentary
Management emphasized price leadership and agility in the face of tariff dynamics: 'We are going to continue to invest in price. It is what we do. It is how we grow our business, and we are going to continue to try and mitigate as much of this impact on tariffs as we can for our members' (Ron Vachris). They highlighted proactive sourcing and inventory moves to offset tariff exposure, including moving production to non‑U.S. markets and accelerating local sourcing (Ron Vachris). On digital growth, management underscored ongoing investments in checkout speed and member experience, including the Affirm BNPL program and other tech pilots (Ron Vachris). The leadership also noted strong member growth and engagement, with renewal rates illustrating some volatility due to digital signups and Asia warehouse dynamics, but overall membership health remains positive: 'End Q3 with 79.6 million paid households, up 6.8% YoY; Executive members 37.6 million, up 9% YoY; Executive members represented 47.3% of paid members and 73.1% of worldwide sales.' (Gary Millerchip) Additionally, Costco highlighted logistics and delivery gains, including a 31% increase in items delivered via Costco Logistics and Next continuing to scale (Gary Millerchip; Ron Vachris).
We are going to continue to invest in price. It is what we do. It is how we grow our business, and we are going to continue to try and mitigate as much of this impact on tariffs as we can for our members. So it is as we have always done, it is full force ahead on lowering prices where we can.
— Ron Vachris
A recent example in e-commerce is the launch of a buy now, pay later offering through our partnership with Affirm. This new program allows our members greater access to the Costco Wholesale Corporation values on big-ticket items such as appliances, furniture, consumer electronics, and much more at exclusive rates for the Costco Wholesale Corporation members.
— Ron Vachris
Forward Guidance
Key near-term guidance items: Capex for the full year expected to be 'a little over $5 billion'; warehouse expansion trajectory remains intact with 27 net new builds planned in FY2025 (total warehouses ~914). The company cautioned on LIFO dynamics, signaling an anticipated $40–$50 million incremental LIFO charge in Q4 if inflation persists; inflation and tariff environments remain uncertain, with management emphasizing agility in sourcing and pricing. Cost discipline in SG&A plus gross margin resilience through fresh category leverage, dairy/egg/butter deflationary tailwinds, and continued price investments are expected to support mid‑ to high‑single‑digit net income growth and continued EPS expansion. Investment theses to monitor: (1) trajectory of tariff policy and its impact on input costs and sourcing; (2) progression of e-commerce and Costco Logistics profitability; (3) member renewal dynamics, particularly for digital memberships; (4) progress on Costco Next and private-label penetration (Kirkland Signature) and its implications for gross margins; (5) wage/benefit inflation and its beat/risk to SG&A. Overall, investors should monitor tariff developments, FX volatility, and the pace of warehouse openings as proximate catalysts for the next 6–12 months.