Earnings Preview: Costco poised to cap fiscal 2025 with strong profit growth

Over the years, Costco Wholesale Corporation (NASDAQ: COST) has consistently upheld its competitive pricing strategy, even while facing macroeconomic challenges and unfavorable market conditions. While the evolving tariff scenario poses challenges for the company, it has taken measures to deal with the situation — such as rerouting goods from high-tariff countries to its non-U.S. markets.

Estimates

Going by analysts’ positive outlook, the company appears to have ended fiscal 2025 on a positive note, with an estimated 8% YoY increase in net sales to $86.13 billion in the fourth quarter. The consensus earnings per share estimate is $5.81 for Q4, vs. $5.29 in the corresponding three-month period of FY24. The Q4 earnings report is slated for publication on Thursday, September 25, at 4:15 pm ET.

After navigating a volatile 2025 marked by shifting consumer trends and macro headwinds, the warehouse giant’s shares closed the latest session modestly higher than their January levels – underscoring investor confidence in its long-term fundamentals. However, COST appears to be losing some momentum ahead of next week’s earnings — declining about 2% since last month.  

Strong Sales

Comparable store sales grew at a strong pace in recent quarters, with e-commerce sales consistently rising in double-digits. In the third quarter, comparable sales increased 5.7%, with sales growing across all operating segments. At $63.2 billion, Q3 revenue was up 8% year-over-year. Consequently, net income grew 13% YoY to $1.90 billion or $4.28 per share in the May quarter.  Earnings exceeded Wall Street’s expectations, while sales missed.

From Costco’s Q3 2025 Earnings Call:

“As we look ahead to the remainder of the fiscal year, while the impacts of tariffs and the outlook for the economy in general remain unknown, we are confident in the ability of our operators and merchants to rise to the challenges and continue to offer great service and find consistent values for our members. Our results in recent quarters have reinforced for us that in uncertain times, our values resonate with members as strongly as ever.”

Expansion

The management targets to open 27 new warehouses in 2025, bringing its total warehouse count to 914 worldwide. Costco is one of the top beneficiaries of the value-oriented shift in consumer behavior. As consumers remain cautious, it continues to increase value through measures like further lowering prices of household essentials and expanding gas station hours. The company’s low-priced private label Kirkland Signature brand is doing well, with sales outpacing its overall sales growth in the most recent quarter.

Once considered a laggard in e-commerce, the company has made significant progress in adopting digital technology. E-commerce sales grew at accelerated pace in recent quarters, benefitting from innovations like launch of the Buy Now Pay Later scheme. Meanwhile, higher input costs related to new import tariffs could weigh on profitability, though the management has taken steps to mitigate the impact. The company operates on small margins, due to relatively low prices on a large chunk of its merchandise.

Costco’s shares have mostly traded sideways in recent weeks. On Wednesday, the stock opened at $954, which is slightly below its 52-week average of $ 962.34.