Costco Wholesale Corp Reports Strong Q3 2026 Financial Results
Costco Wholesale Corp, a leading player in the membership warehouse retail industry, has released its Q3 2026 financial results, showcasing robust growth in net sales and membership revenue. The company continues to capitalize on its business model focused on low prices and efficient inventory management, despite facing challenges in gross margins.
1. Overview of Financial Performance
In the third quarter of 2026, Costco reported net sales of $69.15 billion, marking a significant 12% increase compared to the same period last year. This growth can be attributed to both an increase in comparable sales and the contributions from 23 new warehouses opened since Q3 2025. Higher gasoline prices had a positive impact, adding approximately $1.37 billion to net sales. Additionally, favorable foreign currency fluctuations contributed around $643 million.
Membership Revenue and Renewal Rates
Membership fee revenue also saw a noteworthy increase of 11%, reaching $1.37 billion. This surge is largely due to new member sign-ups, fee increases, and upgrades to Executive Membership. Costco's membership renewal rates remain strong, with 92.2% in the U.S. and Canada and 89.7% globally.
2. Segment Performance
Costco operates through three main segments: the U.S., Canada, and Other International. Notably, the Other International segment exhibited higher square footage growth and lower wage costs as a percentage of sales. The gross margin percentage showed improvements in the Canadian and Other International segments due to growth in ancillary businesses, although there was a decline in core merchandise categories.
Gross Margins and Operating Expenses
The gross margin as a percentage of net sales decreased by 21 basis points during the quarter. However, excluding the effects of gasoline price inflation, it actually increased by one basis point. This improvement was driven by ancillary services, particularly in pharmacy and e-commerce, while core categories like foods and fresh produce faced margin pressures.
Conversely, Selling, General and Administrative (SG&A) expenses as a percentage of net sales decreased by 20 basis points, primarily due to the absence of one-time expenses related to employee vacation and central operating costs.
3. Cash Flow and Capital Expenditures
Costco's cash flow from operations totaled $11.13 billion for the first thirty-six weeks of 2026, up from $9.47 billion in the same period of 2025. This increase reflects higher operating income and improved inventory management. The company has plans to invest approximately $6.5 billion for the fiscal year to support new warehouse openings and enhance its digital business capabilities.
Dividend and Share Repurchase Initiatives
On April 15, 2026, Costco declared a quarterly cash dividend of $1.47 per share, paid on May 15, 2026. Additionally, a share repurchase program authorized in January 2023 allows for the repurchase of up to $4 billion in shares, with $1.36 billion remaining available for purchase at the end of the third quarter.
4. Financial Statements Overview
The following diagrams provide a comprehensive look at Costco's financial statements for Q3 2025 and Q3 2026.
| Jun 2025 | Jun 2026 | |
|---|---|---|
Net Income | 7.84B | 8.83B |
Profit | 7.57B | 8.31B |
Net Income Continuing | 7.57B | 8.31B |
Income Tax Expense | 2.57B | 2.91B |
Pretax Income | 10.15B | 11.22B |
Non-operating Income | 71M | 0 |
Operating Income | 10.08B | 11.22B |
Revenue | 268.7B | 293.5B |
Costs and Expenses | 258.6B | 282.3B |
Cost of Revenue | 234.4B | 255.7B |
Operating Expenses | 24.25B | 26.57B |
Selling, General & Administrative | 24.25B | 26.57B |
| Jun 2025 | Jun 2026 | |
|---|---|---|
Total Assets | 75.48B | 86.43B |
Total Current Assets | 38.15B | 45.17B |
Cash and Equivalents | 13.83B | 18.94B |
Short-term Investments | 1.01B | 1.05B |
Net Inventories | 18.60B | 19.41B |
Other Current Assets | 1.82B | 2.01B |
Total Non-current Assets | 37.33B | 41.25B |
Net PP&E | 30.58B | 34.29B |
Lease Assets | 2.71B | 2.74B |
Other Non-current Assets | 4.03B | 4.21B |
Total Liabilities and Equity | 75.48B | 86.43B |
Total Liabilities | 48.35B | 52.92B |
Total Current Liabilities | 37.57B | 42.12B |
Accounts Payable and Accrued Liabilities | 27.21B | 30.52B |
Current Deferred Revenue | 2.93B | 3.15B |
Other Current Liabilities | 7.43B | 8.43B |
Total Non-current Liabilities | 10.77B | 10.79B |
Long-term Debt | 5.71B | 5.67B |
Other Non-current Liabilities | 5.06B | 5.12B |
Total Equity and Non-controlling Interests | 27.12B | 33.50B |
Total Equity | 27.12B | 33.50B |
| Jun 2025 | Jun 2026 | |
|---|---|---|
Net Change in Cash | 3.43B | 5.11B |
Effect of Exchange Rate Changes | 50M | 6M |
Net Cash from Operating Activities | 12.42B | 15B |
Operating Profit | 7.84B | 8.83B |
Adjustment to Operating Profit | 4.58B | 6.16B |
Net Cash from Investing Activities | -5.04B | -6.12B |
Investments | -99M | 36M |
Productive Assets | 5.10B | 6.19B |
Other Investing Activities | -36M | 102M |
Net Cash from Financing Activities | -3.99B | -3.76B |
Debt | -1.22B | -216M |
Dividends | 1.54B | 2.30B |
Equity Issuance/Repurchase | -839M | -883M |
Other Financing Activities | -393M | -362M |
5. Conclusion
Costco Wholesale Corp's Q3 2026 results reflect a solid performance characterized by strong net sales growth and robust membership revenue. The company's strategic focus on maintaining competitive pricing, expanding its warehouse presence, and enhancing digital capabilities positions it well for sustained long-term profitability and member loyalty. As Costco continues to navigate challenges in gross margins and operational costs, its commitment to operational excellence and customer satisfaction remains a cornerstone of its business strategy.
