Costco, the US warehouse retail giant, will release its fiscal fourth-quarter 2025 earnings report after the US market closes on September 25. Bloomberg analysts expect Costco's fourth-quarter revenue to be $86.073 billion, with adjusted net income of $2.582 billion and adjusted EPS of $5.82.
Review of Last Quarter's Results
Data shows that Costco performed exceptionally well in the quarter, with all key metrics showing positive growth. Costco achieved revenue of $63.21 billion, an 8% year-on-year increase, slightly exceeding the market expectation of $63.19 billion. Earnings per share reached $4.28, a 13.2% year-on-year increase, exceeding analysts' previous estimate of $4.24. Net income reached $1.9 billion, a 13.1% year-on-year increase.
Looking at sales data, Costco's comparable sales increased by 8%. E-commerce performed particularly well, with sales increasing by nearly 16%. Membership fee revenue increased by 10.4% year-on-year to $1.24 billion in the quarter, broadly in line with market expectations.
As of the third quarter of 2025, Costco had 79.6 million paid household members worldwide, exceeding 140 million if family-shared cardholders are included. With a renewal rate remaining above 90%, Costco's paid membership business model has demonstrated strong resilience.
Performance Forecast for This Quarter
Sales Growth Expectation: Monthly data indicates that Costco's monthly net sales for August 2025 will be US$21.56 billion, an 8.7% year-on-year increase. Same-store sales will increase by 6.3% overall, with growth in the US (6.1%), Canada (6.8%), and other international markets (6.7%). E-commerce will also see an 18.4% year-on-year increase. Excluding the impact of oil prices and exchange rate fluctuations, overall same-store sales will increase by 6.9%. Based on this, net sales are expected to maintain steady growth in the fourth quarter. The US market, its primary revenue driver, is expected to benefit from the continued consumer recovery and Costco's strong brand loyalty, achieving some comparable sales growth. In terms of international markets, Canada is expected to continue its steady growth, while other international regions, such as parts of Asia, are expected to contribute significant year-on-year growth as new warehouses continue to be deployed and brand awareness increases. E-commerce is expected to remain a growth driver, with the company's efforts in technology investment and personalized member experiences expected to drive double-digit e-commerce sales growth.
Profit Outlook: Despite potential supply chain cost fluctuations, Costco is expected to maintain relatively stable costs through economies of scale and close collaboration with suppliers. Regarding gross profit margin, the strong performance of the fresh produce department and optimized merchandise procurement costs are likely to continue driving modest gross profit margin growth. However, the expansion of new warehouses and employee compensation and benefits expenses may put some pressure on profit growth. Membership fee revenue is expected to continue to grow steadily, becoming a key pillar of profitability. With increasing membership numbers and stable renewal rates, membership fee revenue is expected to contribute significantly to the company's profits.
Business Expansion Progress: In the fourth quarter, Costco plans to open 10 new warehouses, a pace of expansion that will further expand its market reach. The opening of new warehouses typically results in some short-term operating cost increases, but in the long term, it is expected to attract new members and boost sales. The company's expansion into new markets will lay a solid foundation for future growth. For example, in some emerging markets, Costco's entry could spark strong consumer interest, quickly expanding the market.
Risks and Challenges
Macroeconomic Uncertainty: Although the current economy is showing some signs of recovery, the global economic environment remains subject to numerous uncertainties, such as trade frictions and geopolitical risks. These factors could impact consumer confidence and purchasing power, negatively impacting Costco's sales growth. As recession expectations grow, consumers may cut back on discretionary spending, potentially challenging Costco's sales of high-end and discretionary items.
Intensified Competition: The retail industry faces intense competition, not only from traditional competitors, such as large retailers like Walmart (WMT), but also from the rise of emerging e-commerce platforms. These competitors may compete for market share through price wars and promotions, putting pressure on Costco. Some e-commerce platforms may leverage convenient delivery services and personalized recommendations to attract potential Costco customers.
Cost Pressures: Fluctuations in supply chain costs, such as rising raw material prices and increased transportation costs, could squeeze Costco's profit margins. Furthermore, changes in the labor market could lead to higher employee compensation and benefits costs. If Costco fails to effectively pass these cost pressures on to product prices, it could negatively impact its profitability.
Membership Renewal Risk: While Costco currently maintains a high membership renewal rate, this rate could decline if the company fails to consistently offer attractive merchandise and services that meet member needs. Competitors offering more attractive membership benefits or product selections could attract members away from Costco.
Wall Street Investment Bank Views
Goldman Sachs (GS): Goldman Sachs analysts believe Costco has a strong competitive advantage in the current retail environment. Its unique membership model and strong supply chain management enable it to maintain stable sales growth despite macroeconomic uncertainty. Analysts expect Costco to continue to benefit from consumers' increased demand for value in the fourth quarter, with sales and profits expected to exceed consensus expectations. Goldman Sachs maintains its Buy rating on Costco and assigns a high target price, believing the company's stock has significant upside potential. JPMorgan Chase (JPM): JPMorgan analysts noted that Costco has demonstrated strong sales growth momentum over the past few quarters, particularly in e-commerce. In the fourth quarter, the company is expected to continue expanding its global market share, particularly in international markets, which will create new growth opportunities. Despite some cost pressures, Costco's strong pricing power and cost control measures will help maintain profitability. JPMorgan Chase has an Overweight rating on Costco stock and raised its target price, reflecting its optimistic outlook for the company's future performance.
Wells Fargo (WFC): Wells Fargo analysts stated that Costco's membership renewal rate remains high, demonstrating strong consumer loyalty to the brand. In the fourth quarter, the company expects further improvements in member satisfaction and purchase frequency as it continues to introduce new products and services. Furthermore, Costco's efforts in supply chain optimization will help improve operational efficiency and reduce costs. Wells Fargo maintains a Neutral rating on Costco and believes the company's stock price will steadily rise in line with its performance.
Barclays: Barclays analysts believe that Costco's ability to maintain relatively stable performance amidst economic fluctuations is primarily due to the resilience of its membership-based business model. In the fourth quarter, the company is expected to continue to benefit from membership growth and escalating spending. Furthermore, Costco's exploration of digital marketing and advertising revenue offers new opportunities for future growth. Barclays has raised its target price for Costco but maintained its rating at a similar level to its previous rating, maintaining a cautiously optimistic outlook for the company's prospects.
Conclusion
Overall, Costco is expected to continue its growth momentum in the fourth quarter of fiscal 2025, with solid sales and profit growth expected. The company's efforts in business expansion, maintaining its membership system, and cost control have provided strong support for its performance growth. Wall Street investment banks are generally optimistic about Costco, with most rating it a buy or overweight and raising its target price. However, the company still faces risks and challenges such as macroeconomic uncertainty and intensified competition. When investors look at Costco's fourth-quarter financial report, they should focus on the sustainability of sales growth, profit performance, membership renewals, and the company's plans for future strategies to fully assess the company's investment value.
This content is generated based on Tiger AI and Bloomberg data, for reference only.