Costco Wholesale Corporation reported fiscal second‑quarter 2026 results that surpassed Wall Street expectations, with net sales of $68.24 billion and diluted earnings per share of $4.58. Membership fee income rose 13.6% year‑over‑year to $1.355 billion, while comparable sales grew 7.4% globally and 6.7% excluding gasoline and foreign‑exchange effects. Digitally enabled comparable sales jumped 22.6%, and the company’s renewal rate held at 89.7% worldwide.
Revenue beat estimates largely because of a 9.1% year‑over‑year increase in net sales, driven by strong demand in core merchandise categories and a 13.6% rise in membership fee income. The 7.4% comparable sales growth reflects higher traffic and ticket size, supported by price reductions on essentials and the “treasure hunt” shopping experience that continues to attract members. Digital sales growth of 22.6% indicates successful expansion of the e‑commerce platform, adding a new revenue stream that complements the warehouse model.
EPS exceeded expectations by $0.03 per share, a 0.7% beat, thanks to a 14% rise in net income to $2.035 billion. Gross margin expanded to 11% from 10.83% year‑over‑year, a 17‑basis‑point lift driven by higher ancillary business performance and operational efficiencies. SG&A rose 13 basis points to 9.2%, reflecting wage investments and extended operating hours. The combination of margin expansion, cost control, and higher membership fee income underpinned the earnings beat.
Management guided for a fiscal‑year EPS range of $4.89 to $6.40 and reiterated plans to open 28 net new warehouses in FY 2026, with a long‑term target of 30+ openings per year. The guidance signals confidence in continued demand and scale, while the company noted ongoing tariff pressures and cost inflation as headwinds. CEO Ron Vachris said, “We have already cut prices on items like textiles, bedding, and cookware following the Supreme Court’s decision to strike down Trump’s emergency tariffs.” CFO Gary Millerchip added, “Net income for the second quarter came in at $2.035 billion or $4.58 per diluted share, up nearly 14% from $1.788 billion or $4.02 per diluted share in the second quarter last year.”
Investor reaction was mixed, with valuation concerns tempering enthusiasm. Despite the strong operational results, the company trades at a P/E ratio of roughly 50x, a level that prompts caution among investors who weigh the premium against the company’s growth prospects. The market’s tempered response reflects a broader focus on valuation multiples rather than the underlying earnings momentum.
Overall, Costco’s Q2 2026 performance demonstrates robust execution and a resilient membership model. The company’s ability to grow revenue, expand margins, and maintain high renewal rates positions it well for continued growth, even as valuation dynamics and macro headwinds remain a consideration for long‑term investors.
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