Costco Turns Rising Fuel Costs to Its Advantage! Delivering Strong Q3 Earnings with Phenomenal Customer Attraction | Costco [COST]

I will pick up and introduce notable stocks based on today's market conditions.
This time, the stock is Costco [COST].

[Notable News Summary]

• Third-quarter earnings were strong, exceeding market expectations with revenue of $69.15 billion, an 11.6% increase year-over-year, and same-store sales up 9.8%.

• The company has begun filing claims for refunds on past illegal tariffs and plans to use those funds to give back to members (such as through future product price reductions).

• Due to the surge in fuel prices against the backdrop of the Middle East situation, sales volume at the attached gas stations reached a record high, serving as a powerful driver for store traffic.

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COST | Costine| Costco

Table of Contents

Company Introduction

• Costco Wholesale (COST) is a major U.S. retailer that operates massive membership-based warehouse stores around the world.

• By using annual membership fees as its primary revenue base, it has established a business model that provides high-quality products, from food and daily necessities to home appliances, at extremely low prices.

• Through the development of its private brand "Kirkland Signature" and the inclusion of low-priced gas stations, it boasts overwhelming customer loyalty and a high renewal rate.

DEEP DIVE

Resilient consumer spending and successful digital strategy drive performance

Costco's third-quarter earnings were outstanding, capturing strong consumer demand even in an inflationary environment.

Revenue reached $69.15 billion (up 11.6% year-over-year), and earnings per share (EPS) remained solid at $4.93. Notably, comparable store sales—a key indicator of a company's core earning power—rose 9.8% globally, significantly exceeding market expectations.

Behind this strong performance is not only an increase in foot traffic to physical stores but also rapid growth in digital sales (e-commerce), which surged by 21.5%.

By consistently offering value to members, from daily necessities to newly launched private-label products, the company maintains a growth pace that surpasses other major retailers.

Member rebate strategy regarding tariff refunds and future challenges

In this earnings announcement, management emphasized their policy regarding refunds for tariffs previously paid to the government.

Following a February 2026 U.S. Supreme Court ruling that declared certain previously imposed tariffs illegal, Costco has begun the process of claiming significant refunds from the government.

Costco previously had to pass on rising tariff costs to consumers through higher prices, but they have stated that the recovered funds will be returned to members in some form.

Specifically, these funds are expected to be used for further price reductions on products. However, class-action lawsuits have been filed by consumers who purchased goods at higher prices in the past, arguing they should be directly refunded. This is a point investors should monitor, as future legal developments could impact profit margins and corporate image.

Leveraging geopolitical risks for gas station customer attraction

Amid rising energy prices driven by conflicts such as those between the U.S. and Iran, Costco's on-site gas stations have recorded their highest sales volumes ever.

As gasoline prices rise across the U.S., Costco is strongly attracting cost-conscious consumers by offering fuel at prices lower than the market average. For novice investors, it is important to know that the profit margin on gasoline sales itself is not particularly high for Costco.

However, new customers and members who visit for cheap gas often end up purchasing large quantities of groceries and daily necessities inside the warehouse store, creating a powerful synergy that significantly boosts overall sales and profits.

This earnings report brilliantly demonstrated a resilient business model that turns even macroeconomic headwinds like high fuel prices into a weapon for customer acquisition and market share expansion.

Sources for searching and verifying the latest information

• Investing.com: "Costco rides consumer spending surge to stellar Q3 earnings"

• Seeking Alpha: "Costco smashes comparable sales expectations, outpaces big box peers"

• MarketWatch: "Costco gas demand hits records, as shoppers try stay ahead of future price spikes"

• KING 5 (Seattle): "Costco sued over claims it raised prices, then sought tariff refunds from government"

• Money.com: "Will Costco Share Tariff Refunds With Shoppers? Here's What We Know"

• Zacks.com: "Buy, Hold or Sell Costco Stock? Key Tips Ahead of Q3 Earnings"

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