Costco’s latest quarter saw a positive market response, as management emphasized the company’s ability to grow sales and maintain margins amid a challenging consumer and cost environment. Key drivers included increased traffic, particularly in the U.S., higher penetration of Kirkland Signature private-label items, and strategic sourcing that helped offset tariff-related pressures. CEO Ron Vachris credited the merchandising and operations teams for “maintaining our competitive price position despite a challenging macroeconomic backdrop.” The company also benefited from category strength in fresh food and non-food items, with proactive inventory and price management helping to both support sales and limit cost impacts.
Is now the time to buy COST? Find out in our full research report (it’s free).
Costco (COST) Q2 CY2025 Highlights:
- Revenue: $63.21 billion vs analyst estimates of $63.19 billion (8% year-on-year growth, in line)
- Adjusted EPS: $4.28 vs analyst estimates of $4.24 (0.9% beat)
- Adjusted EBITDA: $3.08 billion vs analyst estimates of $3.02 billion (4.9% margin, 2.2% beat)
- Operating Margin: 4%, in line with the same quarter last year
- Locations: 905 at quarter end, up from 876 in the same quarter last year
- Same-Store Sales rose 5.7% year on year, in line with the same quarter last year
- Market Capitalization: $436.9 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 Costco’s Q2 Earnings Call
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Simeon Gutman (Morgan Stanley) asked if Costco would accelerate price investments or change its pricing posture amid tariff uncertainty. CEO Ron Vachris emphasized the company’s continued focus on lowering prices where possible and maintaining its value proposition regardless of external conditions.
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Christopher Horvers (JPMorgan) questioned the extent to which inventory pull-forward in anticipation of tariffs impacted non-foods sales and whether demand was shifted from future quarters. Vachris replied that while there was a slight pull-forward, quantifying the impact was difficult, and overall member demand remained solid.
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Michael Lasser (UBS) raised concerns about the sustainability of growth in non-foods and potential limitations from crowded warehouses. CFO Gary Millerchip noted that new warehouse openings are strategically planned to relieve high-traffic locations and improve the member experience.
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Scott Ciccarelli (Truist) asked whether the recent trend of operating margin expansion could continue. Millerchip explained that margin growth is not managed quarter-to-quarter but is a product of long-term value creation for members and operational productivity.
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Jiang Ma (Bernstein) inquired about the LIFO accounting impact from inflation and tariffs, and whether margin pressures would persist. Millerchip detailed the mechanics behind recent charges and explained that future impacts will depend on inflation and tariff changes.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the effectiveness of tariff mitigation and sourcing strategies in limiting cost pressures, (2) continued digital adoption and the impact of new technology pilots on member engagement and operational efficiency, and (3) the pace of warehouse expansion, particularly in markets identified for congestion relief. Progress in these areas will serve as key indicators of Costco’s ability to balance growth, cost management, and member value.
Costco currently trades at $985.58, down from $1,007 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).
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