Costco beats sales estimates but misses profit on rising costs

Costco Wholesale beat Wall Street expectations for second-quarter revenue today, as its members shopped more goods, including groceries, home furnishings and electronics in bulk, but missed profit estimates on rising merchandise costs.

The company’s shares, which were up 39% in 2024, fell nearly 1% in extended trading.

The membership-only retail chain has been enjoying value-seeking customers turning to its aisles for buying goods, with purchase frequency increasing during the holiday season, a time when retailers across the United States rolled out heavy discounts.

However, Costco is vulnerable to problems including trade wars developing from President Donald Trump’s tariffs on imports to the U.S., as well as from retaliatory tariffs by countries including Canada.

Canada and Mexico, which are under the U.S. tariff radar, house 109 and 41 of Costco’s warehouses, respectively, said the company. These two countries are the largest operations following the United States and Puerto Rico.

It has also been growing operations in China, which houses seven of the company’s 897 warehouses.

Costco is likely to see an impact on merchandise sourcing and product pricing decisions as tariffs-related uncertainty continues. Its merchandise costs for the reporter quarter rose 9% from a year earlier.

The company’s quarterly revenue rose 9% to $63.72 billion, compared with analysts’ average expectations of $63.13 billion according to data compiled by LSEG.

Costco earned $4.02 per diluted share, missing analysts’ estimate of $4.11 per share.