Costco Wholesale Corp. delivered stronger-than-expected third-quarter earnings on Thursday, showcasing its ability to navigate economic challenges and shifting tariffs with scale, loyal shoppers, and strategic pricing. For the quarter ended May 11, the retail giant posted earnings per share of $4.28, exceeding Wall Street estimates and underscoring its resilience as consumers cut back on discretionary spending.
Despite the upbeat results, Costco shares were little changed in pre-market trading Friday. The stock has climbed 10% year-to-date through Thursday’s close.
Costco joins the ranks of big-box retailers reporting earnings amid investor scrutiny of consumer habits. While several companies — including Target, Procter & Gamble, and Kraft Heinz — have lowered outlooks, others like Walmart have stood out with solid performance.
The retail landscape continues to be shaken by unpredictable U.S. tariffs, which have disrupted operations and pricing strategies across industries. Courts are now weighing their long-term viability.
“We’re making decisions based on what’s in effect today,” CFO Gary Millerchip said, noting that Costco hasn’t made recent changes despite legal developments, as tariffs remain in place. “It’s hard to plan around uncertainty.”
Looking ahead, Costco expects to implement selective price increases as new inventory arrives. Some items will stay flat, others may see higher prices, and a few could be dropped entirely if costs become prohibitive, Millerchip added.
CEO Ron Vachris told analysts that the company is also adjusting its supply chain—shifting sourcing away from tariff-heavy regions and increasing purchases of U.S.-made goods like pillows and mattresses. About one-third of Costco’s U.S. sales come from imported products.
The company has also pulled forward summer merchandise, such as sporting goods, to better manage pricing. While fresh produce like bananas and pineapples have remained affordable, prices of more discretionary items have risen.
In response to falling commodity costs, Costco recently lowered prices on staples like eggs and butter. Expanded gas station hours and these food price cuts supported the quarter’s performance. However, prices for non-food items rose modestly due to ongoing import pressures.
“It’s full-force ahead on lowering prices where we can,” Vachris emphasized.
Costco’s member-based model, affluent customer base, and limited product assortment give it a buffer against economic swings. The company continues to grow its Kirkland Signature brand and bolster its digital presence.
Known for sacrificing short-term profits to grow its member base and drive loyalty, Costco’s scale gives it greater flexibility in pricing and product selection.
Meanwhile, U.S. consumer sentiment has weakened during the ongoing tariff era, though spending has largely held up — for now. Retailers across the board are taking a surgical approach to pricing: holding steady on essentials, raising prices selectively, and eliminating products that become too costly.
Costco reported an 8% rise in comparable sales (excluding gas and currency effects) and a 16% increase in e-commerce sales for the quarter. Website and store traffic also grew, with strong demand for gold, toys, and health and beauty products.
On Friday, Raymond James analyst Bobby Griffin reiterated an Outperform rating and a $1,070 price target on Costco, following the company’s robust third-quarter fiscal 2025 earnings report. Griffin expressed continued confidence in Costco’s performance, highlighting its adjusted earnings per share (EPS) of $4.28—above analyst expectations—and the 8% year-over-year increase in comparable store sales, excluding fuel and foreign exchange impacts.
According to InvestingPro data, Costco currently trades at a price-to-earnings (P/E) ratio of 58.8x, suggesting the stock is overvalued relative to its Fair Value. Analyst price targets range broadly, from $610 to $1,225.
Griffin’s optimism is supported by Costco’s solid membership trends, including rising executive membership penetration and increased digital engagement. These factors are seen as deepening customer loyalty and spending while maintaining industry-leading renewal rates.
Despite the stock gaining 25% over the past 12 months—well above the S&P 500’s 12% rise—Griffin believes Costco’s valuation premium is justified. He credits the company’s consistent operational execution, resilient product mix, and strong member loyalty for supporting the stock’s upward momentum.
Looking ahead, Raymond James expects Costco to maintain its growth trajectory with approximately 25 net new store openings per year. The company is also projected to continue capturing market share across both food and non-food segments, supported by strategic reinvestment and capital returns to shareholders.
Griffin also noted that Costco is well-positioned to manage tariff pressures thanks to its efficient supply chain, strong vendor relationships, and competitive pricing strategies. The company reported $268.8 billion in revenue over the past 12 months, a 5.9% year-over-year increase.
In an inflationary environment, Griffin sees Costco’s value-driven business model and scale as increasingly appealing to cost-conscious consumers. He characterized the retailer as a “core long-term compounder” capable of thriving in various macroeconomic conditions.
Costco has also demonstrated financial discipline, maintaining a 22-year streak of uninterrupted dividend payments. Over the past 12 months, it posted a 27.45% increase in dividend growth, with a current yield of 0.52%, according to InvestingPro.
Q3 2025 Financial Highlights
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Net income: $1.9 billion, up 13% year-over-year
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Revenue: $61.96 billion (vs. $63.11 billion expected)
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EPS: $4.28, beating forecasts
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Comparable sales: +8% (excluding gas and FX)
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Membership fee revenue: +10.4% YoY
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New warehouses opened: 9 in Q3, with 10 more planned for Q4
Following the earnings release, Bernstein analysts also raised their price target on Costco stock from $1,148 to $1,153, maintaining an Outperform rating. They cited the company’s global expansion potential but expressed caution regarding its elevated valuation, warning that a slowdown in sales growth could pose risks.
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