Costco’s Q4 Earnings Call: Our Top 5 Analyst Questions
Costco’s fourth quarter results for 2025 reflected steady growth across its core retail operations, with management highlighting ongoing success in expanding its warehouse footprint and driving member engagement. CEO Ron Vachris credited new warehouse openings, relocations, and productivity enhancements as key contributors to revenue growth, alongside increased adoption of digital tools. Management also noted strong performance in both fresh and nonfood categories, aided by new product introductions and supply chain efficiencies. CFO Gary Millerchip emphasized that membership fee income benefited from both a recent fee increase and continued upgrades to executive memberships, while core margin improvements were supported by higher private label penetration and targeted marketing initiatives.
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Costco (COST) Q4 CY2025 Highlights:
- Revenue: $67.31 billion vs analyst estimates of $67.03 billion (8.3% year-on-year growth, in line)
- Adjusted EPS: $4.50 vs analyst estimates of $4.27 (5.4% beat)
- Adjusted EBITDA: $3.06 billion vs analyst estimates of $3.07 billion (4.5% margin, in line)
- Operating Margin: 3.7%, in line with the same quarter last year
- Locations: 921 at quarter end, up from 896 in the same quarter last year
- Same-Store Sales rose 6.4% year on year (5.2% in the same quarter last year)
- Market Capitalization: $382.9 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Costco’s Q4 Earnings Call
- Michael Lasser (UBS) asked about the balance between reinvesting technology-driven productivity gains and allowing them to improve margins. CEO Ron Vachris emphasized that while technology is critical, Costco will prioritize passing savings to members through lower prices.
- Christopher Horvers (JPMorgan) inquired about the impact of extended operating hours on executive membership growth. CFO Gary Millerchip reported a positive response, with increased executive upgrades and a 1% estimated sales lift from the initiative.
- Oliver Chen (TD Cowen) sought clarity on digital advertising and AI strategies. Millerchip outlined early success in retail media and personalization, while Vachris discussed the dual focus of AI on member experience and business fundamentals.
- Chuck Grom (Gordon Haskett) asked about improving warehouse productivity and expansion strategy. Vachris highlighted creative real estate approaches and the strong returns from both infill and international warehouse openings.
- Kelly Bania (BMO) questioned the drivers behind renewal rate softness and the outlook for improvement. Millerchip explained the impact of digitally acquired members and detailed ongoing efforts to close the renewal gap through targeted engagement.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) progress toward 30-plus annual warehouse openings and the mix between U.S. and international expansion, (2) continued adoption and impact of digital enhancements, including AI-driven improvements in inventory and personalization, and (3) trends in membership renewals, especially as targeted communications seek to address weaker renewal rates among younger, digitally engaged members. Updates on new product launches and ongoing cost management will also be critical signposts.
Costco currently trades at $861.45, down from $884.99 just before the earnings. Is there an opportunity in the stock?Find out in our full research report (it’s free for active Edge members).
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