Costco reported fourth-quarter revenue of $95.72B, up ~11% from a year earlier and above Wall Street's $94.86B estimate.
Adjusted earnings came in at $6.60 per share, excluding a one-time 15-cent benefit from tariff refunds, topping the $6.53 consensus. Total comparable store sales rose 9.4%, and same-store sales excluding gas and currency effects climbed 6.7%.
AI demand is lifting the price of laptops and phones
Gross profit margin slipped to 11.01% from 11.12% a year ago, pressured by consumer electronics. Overall inflation is running in the low single digits and is stable, CFO Gary Millerchip said on the earnings call.
The exception was non-foods, where memory costs on consumer electronics drove most of the increase, along with oil-linked items. The memory market has tightened as demand for high-bandwidth memory and advanced DRAM used in AI servers outpaces supply.
SK Hynix, Samsung Electronics, and Micron have largely sold out premium AI memory capacity through much of 2026. Nvidia, Microsoft, Amazon, and Meta are racing to build infrastructure.
Supply is expected to stay constrained into 2027, a favorable backdrop for producers including Micron and Sandisk.
Tariff refunds are going back into shelf prices
Costco received $184M in tariff refunds during the quarter under the International Emergency Economic Powers Act, consisting of $174M in refunds and $10M in interest.
That represents a little over one-third of the total Costco expects, and a similar amount has already landed in the first quarter, Millerchip said.
Most of it went back into pricing on produce, meat, beverages, home furnishings, and hardware, CEO Ron Vachris said. Gasoline was another driver, with Vachris calling it a record year as fuel prices pushed price-sensitive shoppers toward Costco's discount stations.
Younger shoppers are becoming a bigger share of the base, with members under 40 up almost 60% since the pandemic and now more than a quarter of members.
"Over time, they grow into higher spending members."
Ron Vachris, Costco
Members using the DoorDash and Uber Eats delivery partnerships, which expanded nationwide last week, skew significantly younger than the overall base. Personalized initiatives delivered triple-digit sales growth in the quarter, and 10% of costco.com orders included a personalized item.
The quarter sets up a simple tension for fiscal 2027. Nonrecurring refund dollars flow out to shelf prices while chip inflation keeps pressing on the electronics aisle.
