Costco Q2 Earnings Beat on Membership, Digital Growth
Costco Q2 earnings topped estimates as membership fees and digital sales surged, lifting profit and prompting repositioning around store-expansion plan.
KEY TAKEAWAYS
- Q2 revenue rose to $69.6 billion and diluted EPS was $4.58, beating estimates.
- Membership fees climbed 13.6% to $1.4 billion, lifting recurring cash flow.
- Digitally enabled comparable sales jumped 22.6% with app visits up 63%.
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Costco Wholesale Corporation (COST) reported Q2 earnings that exceeded expectations as membership fees and digitally enabled sales accelerated in the quarter ended Feb. 15, 2026, boosting profit and supporting the retailer’s plan to add stores and expand membership.
Quarter Results and Revenue Drivers
Costco said in a press release on March 5, 2026, that net sales for the 12-week quarter reached $68.2 billion, up 9.1% year-over-year, while total revenue rose 9.2% to $69.6 billion. Net income was $2.0 billion, and diluted earnings per share (EPS) were $4.58, surpassing consensus estimates of $4.55 for EPS and about $69.3 billion for revenue. The company also exceeded the expected 6.3% increase in same-store sales.
Excluding fuel and foreign-exchange effects, comparable sales rose 6.7% company-wide, with the U.S. up 6.4%, Canada 7.6%, and other international markets 7.1%. On an unadjusted basis, comparable sales climbed 7.4%, driven by a 3.1% increase in traffic and a 4.2% rise in average ticket size. U.S. comps grew 5.9%, Canada 10.1%, and other international markets 13.0%.
Digitally enabled sales were a key growth driver, with digitally enabled comparable sales jumping 22.6% (21.7% excluding foreign exchange). App visits surged 63%, e-commerce traffic rose 32%, and average order value increased 15%, contributing to higher overall sales and profit.
Through the first 24 weeks of fiscal 2026, net sales totaled $134.2 billion, up 8.7% year-over-year. Net income for the period was $4.0 billion, with diluted EPS of $9.08. For the four weeks ended March 1, 2026, sales rose 9.5% to $21.7 billion.
Membership Growth and Expansion
Membership fees contributed $1.4 billion for the quarter, up 13.6% year-over-year (12.2% excluding foreign exchange). Costco reported about 82 million paid memberships and roughly 147 million cardholders, including 40 million Executive members, who accounted for 75.8% of membership-related sales. Renewal rates remained strong at 89.7% worldwide and 92.1% in the U.S. and Canada, a key metric supporting recurring revenue.
The company operated 924 warehouses globally, including 634 in the U.S. and Puerto Rico and 114 in Canada. Management reiterated plans to add more locations, targeting more than 30 net new warehouses annually and aiming for 942 stores by the end of fiscal 2026. This expansion is a strategic driver of membership growth and store sales.
Costco is also among hundreds suing the U.S. government to seek refunds on Trump-era International Emergency Economic Powers Act (IEEPA) tariffs, a legal action that could affect cost pass-throughs to members.
Stronger fee income and significant digital sales gains provide Costco with the financial strength to pursue its expansion while maintaining the membership model that drives store traffic and recurring cash flow.
"Costco Wholesale Corporation (“Costco” or the “Company”) (Nasdaq: COST) today announced its operating results for the second quarter (twelve weeks) and the first 24 weeks of fiscal 2026, ended February 15, 2026," the company said in its press release. [source:6]
