Costco's Q3 2025 Earnings Call: Navigating Contradictions in Tariffs, Membership Growth, and Inflation Impact

Tariff impact and pricing strategy, membership growth and renewal rates, Costco's focus on membership experience and warehouse quality, inflation impact on grocery category, and member feedback and membership fee increase are the key contradictions discussed in Costco's latest 2025Q3 earnings call.



Strong Sales and Margin Performance:
- Costco reported net sales of $61.96 billion for Q3, an 8% increase from the previous year, with U.S. comparable sales up 6.6%.
- The growth was driven by strong sales in fresh categories, non-food items, and increased gas station hours, despite inflationary pressures and tariff impacts.

Membership and Renewal Rates:
- Membership fee income rose by 10.4% year-over-year, with a U.S. and Canada renewal rate of 92.7%.
- The growth in membership income was partially due to new digital acquisitions and international expansion, although renewal rates were slightly affected by promotional sign-ups.

Tariff and Supply Chain Management:
- Costco experienced a $130 million LIFO charge in Q3 due to inflation in non-food items, primarily from tariffs.
- The company is leveraging its global operations and expertise in buying to offset tariff impacts, including local production sourcing and strategic inventory management.

Digital and E-commerce Growth:
- E-commerce comp sales increased by 14.8% or 15.7% adjusted for FX, with a significant increase in items delivered by 31%.
- This growth was driven by improvements in digital and technology capabilities, including personalized product recommendations and enhanced delivery services.