Costco Wholesale 2025 Q3 Earnings Strong Performance as Net Income Surges 13.2%

Costco Wholesale (COST), ranking 20th by market capitalization, reported its fiscal 2025 Q3 earnings on June 5th, 2025. The company exceeded expectations with an 8% increase in total revenue, reaching $63.20 billion. Despite economic challenges, Costco’s Q3 results underscore its robust business model and resilient performance. The company anticipates capital expenditures of approximately $5 billion for fiscal 2025, planning to open 28 new warehouses. Membership fee income is expected to see significant growth over the next four quarters, bolstering future performance.

Revenue

Costco Wholesale reported a total revenue of $63.20 billion for Q3 2025, reflecting an 8.0% rise from the same period last year. Net sales were a significant contributor, reaching $61.97 billion, while membership fees also played an essential role, generating $1.24 billion. This growth indicates strong consumer demand across Costco’s diverse product offerings.

Earnings/Net Income

Costco's earnings per share (EPS) rose by 13.2% to $4.29, up from $3.79 in Q3 2024, reflecting sustained earnings growth. The company's net income also increased by 13.2%, reaching $1.90 billion, a record high for fiscal third-quarter net income in over 20 years, showcasing strong financial performance.

Price Action

Post-Earnings Price Action Review

The strategy of purchasing Costco shares post-revenue beat and holding for 30 days has shown impressive results, as backtesting reveals a 20.4% return, outperforming the broader market's 14.1% return. This strategy leverages strong financial performance, indicating potential growth. A 30-day holding period captures short-term momentum while minimizing risk, benefiting from positive market reactions without excessive exposure to volatility. The backtested return reflects effective risk management, differentiating it from passive investment strategies. By limiting the holding period, it avoids prolonged exposure to potential momentum fades, advantageous during downturns. This approach offers growth potential and risk control, validated by backtesting, making it appealing for investors seeking earnings-driven growth opportunities while managing risk.

CEO Commentary

Ron Vachris, President and CEO, highlighted Costco's strong operating results amid macroeconomic challenges. He emphasized that sales growth is driven by value, quality, and newness, resonating with members. Vachris praised the merchandising strategy and supplier relationships that help navigate tariff impacts. He noted exceptional performance in international markets and expressed optimism about member engagement, emphasizing employee pay and benefits.

Guidance

Costco projects fiscal 2025 capital expenditures to reach about $5 billion, with plans for 28 new warehouses, including 15 in the U.S. and 7 internationally. The company expects a mid-single-digit basis point SG&A headwind from wage increases starting in March, while projecting substantial membership fee income growth in the upcoming quarters, particularly in Q4 2025 and Q1 2026.

Additional News

Costco Wholesale recently increased its quarterly cash dividend from $1.16 to $1.30 per share, representing a $5.20 annual payout. This dividend boost reflects Costco's strong financial health and commitment to returning value to shareholders. Additionally, Costco has entered a partnership with Affirm to introduce a buy-now-pay-later service for U.S. customers on Costco.com, enhancing payment flexibility. This collaboration allows members to split payments for purchases between $500 to $17,500 into monthly installments. Lastly, Costco’s expansion into Western Canada includes launching Edna’s Non-Alcoholic Cocktail Co.’s award-winning variety pack in 30 Costco locations, catering to the growing demand for premium non-alcoholic beverages.