Can Costco (COST) remain resilient against tariff headwinds this year?

Costco Wholesale Corporation (NASDAQ: COST) this week reported higher sales and profit for the third quarter, despite tariff-related challenges. Though the warehouse giant’s stock experienced weakness soon after the announcement on Thursday, it gathered momentum in the after-hours and maintained the uptrend in the following session. Heavy discounts and competitive pricing help the company drive traffic to its stores even as most retailers struggle to manage cost pressure.

Stock Gains

This week, the stock traded slightly above the $1,000 mark, higher than its 52-week average price. COST will likely continue gaining momentum, with the potential to break past its February peak. The shares experienced volatility this year after gaining steadily in the early weeks. The value has nearly doubled in the past two years, making the stock appear expensive at its current price.

In the third quarter, revenues rose to $63.2 billion from $58.5 billion in the corresponding period last year. Comparable sales, a key measure that excludes the effects of store opening and closure, grew 5.7% year-over-year, and e-commerce sales climbed 14.8%. Net income was $1.90 billion or $4.28 per share in the May quarter, compared to $1.68 billion or $3.78 per share in Q3 2024. The bottom line exceeded Wall Street’s expectations, after missing in the prior quarter.

Cost Pressure

The positive Q3 outcome reflects measures adopted by the Costco leadership to tackle tariff-related headwinds, including supply chain adjustments to lessen the impact of higher costs. The company is moving more items to locally sourced production to reduce cost and is sourcing more American-made goods in the US. Interestingly, merchandise costs increased only 7% in the third quarter despite the cost pressure, and margins remained healthy.  

From Costco’s Q3 2025 earnings call:

“We’re remaining agile as a situation with tariffs evolves, while also supporting the commitments we’ve made with our long-term suppliers. As an example of this, during the third quarter, we rerouted many goods sourced from countries with large tariff exposure to our non-U.S. markets. In the U.S., we pulled forward some items that we had planned for the summer and sourced additional locally produced goods to reduce tariff impacts and ensure that we were in stock. Actions such as these are allowing us to continue to provide great values for our members, while also delivering value to our shareholders.”

In Growth Mode

Costco continues to expand its store network, demonstrating its resilience to headwinds like consumer spending cuts and economic uncertainty. After opening nine warehouses in the most recent quarter, the company plans to open ten units in the fourth quarter to meet the target of 27 new warehouses for the whole of FY25. That, together with the use of advanced technology to enhance customer experience, should help the business effectively tackle present challenges. Also, the retailer’s distinctive membership-based operating model provides a competitive advantage.

Shares of Costco traded up 4% on Friday afternoon, after opening the session higher. The stock has grown about 14% since the beginning of 2025.