Costco Shares Surge 3% As Q3 Earnings Crush Market Expectations

Recently, Costco (COST) has shown significant growth, buoyed by its recent third-quarter earnings report for fiscal year 2025, which exceeded market predictions. The company's shares rose by more than 3% on the back of impressive earnings per share (EPS) of $4.28, driven by strong same-store sales growth of 8.0% when adjusted for gasoline prices and currency fluctuations. This performance is well above the market expectation of 6.0% and highlights Costco’s ability to leverage its bulk purchasing model and membership strategy to sustain growth despite economic unpredictabilities and currency inconsistencies.

The company's comparable sales growth outpaced that of its competitors, Walmart and Target, during the same period. This success was fueled by its private-label brand, Kirkland Signature, and robust performance in the grocery segment. Additionally, Costco's e-commerce sales surged with a 15.7% increase, a testament to its enhanced digital infrastructure and expanded online offerings which helped it capture more online market share.

Costco’s membership fee income also saw a 10.4% year-over-year increase to $1.24 billion, driven by membership fee hikes, with North American renewal rates reaching an impressive 92.7%. This speaks to the loyalty of its customer base and the effectiveness of Costco's value proposition, with executive members contributing significantly to sales growth.

Across the first three quarters of fiscal 2025, Costco reported a cumulative revenue of $189.08 billion, up 8.20% from the prior year’s $174.76 billion. Its cumulative net income stood at $5.49 billion, representing a 9.50% increase compared to the previous year, while basic EPS reached $12.36.

Founded in 1983 in Seattle, Washington, Costco Wholesale Corporation operates membership warehouses in various countries, including the United States, Canada, and several others in Europe and Asia. Costco's business model focuses on offering members selected national and private-label products at low prices, resulting in high sales volumes and rapid inventory turnover. This model continues to underpin its steady growth and ability to attract budget-conscious consumers even amid economic fluctuations.