Costco Q1 Earnings Preview: Spotlight on margins, and member trends

Costco Wholesale Corporation’s (NASDAQ: COST) upcoming earnings report is expected to shed light on how the warehouse giant is navigating a dynamic consumer environment and tariff-related disruption. With its membership-based model and focus on value, Costco’s performance often serves as a barometer for broader retail trends. The company has a strong track record of effectively balancing growth and operational efficiency.

Estimates

The Issaquah, Washington-headquartered retailer is set to publish its first-quarter fiscal 2026 earnings on Thursday, December 11, at 4:15 pm ET. Market watchers following the event project earnings of $4.28 per share and revenue of $67.16 billion for the November quarter. The estimates represent an improvement from the year-ago quarter when Costco earned $4.04 per share on revenues of $62.15 billion.

For the stock, 2025 was a challenging year as it experienced significant weakness after losing momentum seen in the early weeks. The shares have dropped about 4% in the past month, and the downtrend continues ahead of the earnings. Meanwhile, experts are optimistic about COST’s near-term prospects. Consensus estimates signal a strong rebound, with the stock expected to surpass the $1,000 mark this year. Its relatively low valuation offers investors an opportunity to own a high-quality company that is widely regarded as a compelling long-term investment.

Q4 Results Beat

Costco ended the last fiscal year on a high note, reporting a 5.7% YoY increase in comparable store sales and an impressive 13.6% jump in e-commerce sales for Q4 FY25. Total revenues rose to $86.2 billion in Q4 from $79.7 billion in the prior-year quarter, surpassing expectations. The strong topline growth translated into a 10% growth in earnings to $5.81 per share. Earnings exceeded estimates, marking the second beat in a row. Net income came in at $2.61 billion in the fourth quarter, compared to $2.35 billion in the year-ago quarter.

From Costco’s Q4 2025 Earnings Call:

“Our ultimate goal is to increase our member values compared to the market. From a supply chain perspective, we haven’t seen any major changes since last quarter. Overall, supply remains relatively stable with no notable issues. Looking ahead to the holiday season, our merchants feel good about our inventory position. While the product mix will look a little different from years past, we will have a strong assortment of high-quality items that bring meaningful value, seasonal themes, and exciting newness to our members.”

Tariff Woes

Recently, Costco has come under pressure from new import tariffs, with higher costs weighing on margins and straining its supply chain. The management is working with its partners to find ways to mitigate the impact of cost escalation. The company has also filed a lawsuit against the administration, arguing that the tariffs are illegal and seeking a refund of the substantial duties it has already paid. Going forward, Costco’s growth will largely depend on its ability to balance margin performance with affordability for customers.

One Monday, the stock opened at $893.50, which is below its 12-month average value. COST has declined about 13% in the past six months.