Costco Wholesale (COST) Q4 FY2026 Earnings Call: Q&A Summary

Q: Michael Lasser with UBS asked how Costco is evaluating the return on its price investments from tariff refunds given that monthly sales trajectories have not seen a meaningful change.

A: Gary Millerchip, Chief Financial Officer, responded that the price investments were intended to return value to members on everyday and nonfood items affected by tariffs. He added that comparable sales excluding gas and FX remain robust in the 6% to 7% range, led by strength in nonfood and travel.

Q: Simeon Gutman with Morgan Stanley asked if the narrowing spread between membership growth and unit growth is just noise as long as existing member spend continues to climb.

A: Gary Millerchip answered that Costco is pleased with healthy new member sign-ups, record executive membership penetration, younger member growth under 40, and a slight uptick in renewal rates. He noted these quality metrics indicate strong member loyalty and future spend.

Q: Scot Ciccarelli with Truist asked what it will take to reverse the decelerating trend in membership growth over the last 8 quarters.

A: Gary Millerchip explained that membership growth is experiencing a normalization as younger digitally engaged members mature, and noted that future catalysts could include executive membership penetration and outsized growth in international markets like Asia.

Q: Chuck Grom with Gordon Haskett asked how long the tariff-driven SKU removals lasted last year and how management feels about the holiday assortment.

A: Ron Vachris, Chief Executive Officer, replied that the impact was greatest in the first and second quarters before normalizing. He stated that management feels very good about the buying lineup and upcoming holiday season, supported by strong nonfood sales.

Q: John Heinbockel with Guggenheim asked about visibility into vendor price increases over the next several months and the role of Kirkland Signature in fighting back.

A: Ron Vachris stated that vendor visibility ranges from 30 to 90 days depending on commodities. He noted that the expanding Kirkland Signature brand and collaborative vendor relationships are key tools for keeping prices down.

Q: Rupesh Parikh with Oppenheimer asked how Costco is positioned as agentic commerce and AI search continue to evolve.

A: Gary Millerchip described it as early days with a low base, but noted triple-digit growth in sales originating from AI search tools like Gemini, Anthropic, and OpenAI. He highlighted that AI searches frequently surface the value of a Costco membership and display high conversion rates.

Q: Corey Tarlowe with Jefferies asked if the growth of younger, digitally savvy members causes Costco to rethink the optimal club orientation over the next 3 to 5 years.

A: Gary Millerchip responded that while younger members often start their journey online, the physical warehouse remains crucial for the treasure hunt experience and member loyalty. He emphasized that omnichannel engagement leads to even higher loyalty and shopping frequency.

Q: Kate McSmith with Goldman Sachs asked about the maturity curve for younger customers and the incremental lift expected from new third-party fulfillment agreements.

A: Gary Millerchip explained that younger members typically have smaller households and lower initial incomes, reaching peak spending between ages 40 and 55. On third-party delivery, he noted that each platform generally drives incremental shopping trips rather than cannibalizing core warehouse sales.

Q: David Bellinger with Mizuho asked if third-party delivery expansion is the ultimate solution for younger customers and if it signals a new investment cycle.

A: Ron Vachris answered that Costco is very satisfied with digital engagement, noting that same-day deliveries are mostly completed within 45 minutes as incremental fill-in trips for members.

Q: Kelly Bania with BMO Capital Markets asked for metrics comparing new member households in Asian international markets versus the U.S. as unit growth targets 30 net new units annually.

A: Gary Millerchip explained that Asian warehouses like China, Japan, and Korea typically feature a much higher number of members per warehouse who visit less frequently, whereas U.S. warehouses have fewer members who spend more per member. Both models achieve strong economic outcomes.

Q: Gregory Melich with Evercore ISI asked for more detail on inflation across food and nonfood categories and the impact of the food court return on average ticket.

A: Gary Millerchip stated that overall inflation runs in the low single digits, with recent increases isolated to nonfood memory costs, gas, and petroleum-based items. He clarified that the large Q4 LIFO charge was an annual true-up reflecting late-quarter inflation rather than a sign of broader structural inflation.

Q: Chris Horvers with JPMorgan asked about the 3 to 6 month outlook for grocery inflation and whether industry pricing rationality will hold.

A: Gary Millerchip responded that predicting inflation is difficult due to geopolitical uncertainties in the Middle East and tariff policies, but noted that Costco's core focus remains on finding operational efficiencies and cost savings to keep prices low for members.

Q: Christopher Nardone with Bank of America asked if there are specific SG&A cost buckets under pressure and whether GLP-1 pricing changes will create headwinds next year.

A: Gary Millerchip stated that general liability and health care costs have grown faster, but Costco still achieved SG&A leverage in Q4, with employee agreements currently in their second year. Regarding GLP-1s, Gary and Ron Vachris noted that lower drug prices created headwinds that were successfully offset by strong volume growth and expanded digital healthcare programs.