After releasing a quarterly report showing explosive growth, Costco (COST) has recently brought even more encouraging news to its investors. The warehouse retailer demonstrated accelerating sales momentum in the third quarter of fiscal year 2026, which ended on May 10. Against a backdrop of continuously rising inflation, consumers are becoming increasingly budget-conscious in their search for the best prices, and Costco’s popularity has risen accordingly.
Despite the impressive earnings performance, the stock experienced a decline after the results were released. The market has been concerned that, as inflation persists, the economy could slow down. However, so far these concerns have affected Costco only at the share price level, while its actual business operations continue to benefit.
Key results for the third fiscal quarter include: total sales increased 11.6% year-over-year, same-store sales grew 9.8%, and earnings per share rose to $4.93 from $4.28 in the same period last year.
Membership data reveals a deeper story. Total membership count grew 4.1%, and adjusted membership fee revenue increased 7%. Membership renewal rates remain strong, at 92.2% in North America and 89.7% globally. The global renewal rate is slightly lower than in the past, which is related to Costco’s introduction of online registration. However, online registration has also attracted a younger member base, which holds significant strategic importance for the company’s long-term growth.
Costco is embracing digital technology in various ways to adapt to its unique business model. Although the company is not suited to traditional e-commerce models, it has a mature “buy online, pick up in-store” operation and partners with third-party platforms to offer same-day delivery of fresh groceries. Over the past few months, digital sales have been a key growth driver, increasing 21.5% year-over-year in the third quarter.
Another growth engine comes from the company’s gas stations. As consumers search for the lowest fuel prices, many customers who do not usually patronize Costco’s gas stations have begun trying them out. CEO Ron Vachris said: “We believe this will further enhance these members’ future loyalty, because members who use our gas stations typically spend more in-store as well.”
Costco is one of the few publicly traded companies that reports both quarterly results and monthly data. The latest data shows that growth accelerated again in May: total revenue increased 14.5% year-over-year, same-store sales grew 12.5%, with the highest same-store sales growth in the U.S. domestic market reaching 13.7%. This represents the company’s best monthly performance since late 2021.
According to the third-quarter commentary, rising fuel prices may have been a significant driver of this sales acceleration. However, based on the same analysis, these customers who newly try Costco’s gas stations may continue to choose Costco in the future and increase their spending frequency across the entire business. Therefore, despite the short-term sales spike brought by the recent surge in fuel prices, Costco stands to gain lasting benefits from it.
In summary: Costco, with its strong third-quarter results and accelerating monthly data for May, demonstrates a unique competitive advantage in an inflationary environment. The membership base is growing steadily, and digital and gas station operations have become new growth engines. Although concerns about the macroeconomic environment persist, Costco’s actual operating performance continues to improve, and the stock has resumed its upward trajectory after a brief pullback. By attracting younger members and gas station customers, the company is building momentum for long-term growth.
