Costco Q4 Sales Surge 11.3% Amid Margin Pressures

Costco reported fourth-quarter total net sales of $93.9 billion, marking an 11.3% year-over-year increase. Comparable sales rose 9.4%, while adjusted comparable sales, excluding foreign exchange and oil price impacts, grew 6.7%. The company’s digital channels were a primary driver, with digitally enabled comparable sales expanding by 19.5% during the quarter.

Despite the strong revenue momentum, the stock closed at $893.90, trading below the $895.77 Fibonacci pivot and the $920.56 to $924.61 resistance zone. According to GN markets/earnings (en-US), near-term technical indicators suggest a bearish trend ahead of the September 24 earnings release. Immediate downside support is identified near the $888.11 level, reflecting cautious sentiment regarding valuation and margin risks.

Membership Revenue Drives Profitability

The core of Costco’s investment case remains its membership model. In the third quarter, membership fees increased 10.7% to $1.37 billion. The company ended the period with 82.9 million paid memberships, including 41.2 million Executive-level accounts, which are more profitable. Renewal rates for all memberships stood at 89.7%, with U.S. and Canada rates improving to 92.2%.

High margins on membership fees allow Costco to maintain competitive pricing on merchandise. Sustained growth in renewal rates and the expansion of the higher-tier Executive base are critical for justifying the company’s premium valuation. Investors are closely watching whether these figures will continue to improve in the upcoming quarter.

Digital Channels Expand Reach

Digital growth has become a significant second traffic engine for the retailer. Comparable sales through digital channels grew 21.5% in the third quarter and 19.5% in the fourth. This expansion allows Costco to capture a greater share of member spending without compromising the economics of its physical warehouse model.

By targeting its membership base across both physical and digital platforms, the company is diversifying its revenue streams. This dual-channel approach supports overall customer retention and provides a buffer against potential fluctuations in in-store traffic, reinforcing the company’s market position.

Gross Margin Volatility Persists

Gross margins remain a key fundamental risk. In the third quarter of 2026, gross margin was 11.04%, down 21 basis points from the same period in 2025. Excluding gasoline price changes, margins increased by 1 basis point. The company faces pressure to absorb rising costs to maintain consumer loyalty, which can squeeze profitability.

Persistent inflationary cost pressures and volatile margins leave little room for execution errors. While top-line sales are strong, the ability to maintain margin resilience will be the primary test of the company’s value proposition as it enters the next fiscal period.