Costco Navigates Tariffs, Posts Strong Earnings

​ Updated May 29, 2025

Costco shares experienced a slight dip Thursday despite the company reporting better-than-expected quarterly earnings and revenue. the warehouse club also⁤ saw an 8% year-over-year increase in sales. While Costco typically refrains from providing ‌an annual outlook,​ executives addressed challenges related to tariffs and rising costs during an earnings call. The company’s ability to manage‌ these pressures while maintaining competitive prices is key to its success.

For ⁢its fiscal⁢ third quarter, Costco reported earnings per share of ⁢$4.28, slightly above the expected $4.24. revenue ⁤also exceeded ⁢forecasts, coming in at $63.21 ​billion against an estimated $63.19 billion. Net income for the period ending May 11 reached $1.90 billion, or $4.28 per share,up from $1.68 billion, or $3.78 per share, the previous year. Revenue increased‍ from $58.52 billion in the same period last year.

Comparable sales, a key industry metric, increased by 8%.E-commerce⁤ sales also saw considerable growth,rising nearly ​16% compared to the previous year,excluding gas and foreign exchange fluctuations. As tariffs raise economic worries, and perhaps consumer prices, Costco could stand to benefit. Unpredictable tariff policy could help drive more customers to the warehouse club,which is ⁤known for its competitive prices and bulk discounts,and encourage⁢ them to renew membership. Its clubs also sell discounted gas and groceries, ⁤which are steadier traffic drivers even when consumers pull back on spending. And compared with some other retailers, Costco has ​a ​stronger hand ⁢in price negotiations with suppliers because of its large size.

Gary Millerchip,⁤ costco’s CFO, noted that about‌ one-third of the company’s U.S. sales involve goods⁢ imported from other countries, with approximately 8% originating ⁤from China.

Other retailers have already begun to feel the pinch. Best Buy CEO Corie Barry stated the company has already increased prices on some electronics due to tariffs.similarly, E.l.f. Beauty recently announced a price hike on its makeup products, and Walmart CFO John David Rainey cautioned that higher prices⁣ were expected in late may or June.

Costco CEO Ron‍ Vachris said the company is actively seeking ways to mitigate tariff costs while maintaining low⁤ prices. Strategies include expediting orders to beat tariff deadlines, rerouting goods to non-U.S. markets, and increasing sourcing for its‍ Kirkland Signature brand‍ within the regions were products are sold.

Vachris noted that Costco has even managed to lower prices‌ on certain items‌ like eggs,butter,and olive oil,despite ⁢the tariff landscape.The company is also⁤ focusing on membership benefits, such ⁣as extended gas ‍station hours, to encourage sign-ups and renewals.

millerchip explained that Costco’s streamlined product​ selection ⁤allows for⁢ stronger ‌negotiation with suppliers. The company can‌ also shift ​to ​choice products ‌if necessary.⁢ While ‌Costco has absorbed some tariff-related costs, it has also raised prices in certain instances. Such as, the retailer chose to maintain prices on staples like pineapples and bananas while increasing prices on discretionary items like flowers.

“We felt it was meaningful to to really eliminate the impact there for the member by working⁢ with our suppliers​ and by us finding efficiencies and accepting that‍ there may be a margin impact,” ​Millerchip said.

Costco shares have risen ​approximately 10% this year, outperforming ‌the S&P 500’s gains‌ during the same period.

What’s next

Looking ahead, Costco will likely continue to⁤ balance the pressures of tariffs and⁣ rising costs with its commitment to providing value to its members. The company’s strategies for navigating these challenges will be crucial in maintaining its competitive edge in ⁣the retail landscape.