Costco Wholesale Corp. 10-Q Summary: Fiscal Q3 2026
Business Context and Reporting Period
This filing covers the 12-week fiscal quarter ended May 10, 2026, and the 36-week period ended on the same date. Costco operates 928 membership warehouses globally, with 637 in the U.S. The company reported strong growth driven by comparable sales increases, new warehouse openings, and higher gasoline prices.
Key Financial Metrics
| Metric | Q3 2026 (12 Weeks) | Q3 2025 (12 Weeks) | YTD 2026 (36 Weeks) | YTD 2025 (36 Weeks) |
|---|---|---|---|---|
| Total Revenue | $70,527 million | $63,205 million | $207,431 million | $189,079 million |
| Net Sales | $69,154 million | $61,965 million | $203,374 million | $185,480 million |
| Net Income | $2,192 million | $1,903 million | $6,228 million | $5,489 million |
| Diluted EPS | $4.93 | $4.28 | $14.01 | $12.34 |
| Operating Cash Flow (YTD) | $11,133 million (vs. $9,468 million YTD 2025) | |||
| Cash & Equivalents | $18,946 million (as of May 10, 2026) | |||
| Long-Term Debt | $5,670 million (excluding current portion) | |||
| Gross Margin % | 11.04% | 11.25% | 11.13% | 11.12% |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 12% in Q3 and 10% YTD, driven by a 10% increase in comparable sales and sales from 23 net new warehouses.
- Comparable Sales: Comparable sales grew 10% in Q3 (7% excluding foreign currency and gasoline impacts). Digitally-enabled comparable sales surged 21%.
- Membership: Membership fee revenue rose 11% to $1,373 million, fueled by new sign-ups, fee increases, and Executive upgrades. Total paid members reached 82.9 million; worldwide renewal rate was 89.7%.
- Profitability: Net income increased 15% in Q3. The effective tax rate decreased to 25.4% from 26.2%.
- Gasoline Impact: Higher gasoline prices positively impacted net sales by $1,367 million (221 basis points) in Q3.
Guidance, Outlook, and Risks
- Capital Expenditures: Management intends to spend approximately $6,500 million on capital expenditures for fiscal 2026, focusing on new warehouse openings, remodels, and digital business development.
- Expansion: The company opened 16 new warehouses (including 2 relocations) in the first 36 weeks and plans to open 13 additional warehouses by year-end.
- Dividends & Buybacks: A quarterly dividend of $1.47 per share was declared. Under the $4,000 million share repurchase program (expiring Jan 2027), $1,359 million remains available.
- Risks & Contingencies:
- Legal Proceedings: Ongoing litigation includes class actions regarding wage/hour violations (California, Washington), privacy law violations (pixel trackers), and consumer protection claims regarding Kirkland Signature tequila labeling. The company does not believe these will have a material adverse effect.
- Macro Factors: Risks include geopolitical conditions, tariffs, inflation, and foreign currency fluctuations.
Investor Verification Checklist
- Verify the sustainability of the 10% comparable sales growth rate, particularly the 21% growth in digitally-enabled sales.
- Monitor the impact of rising gasoline prices on gross margin percentage, as higher fuel sales typically lower overall margins.
- Review the status of pending class actions regarding wage theft and privacy laws for potential future accruals.
- Assess the execution of the $6.5 billion capital expenditure plan and its impact on future warehouse profitability.
- Track membership renewal rates, noting the slight drag from digital-only memberships which renew at lower rates.