01—Abstract
Summary
Summary of the 10-Q filed March 11, 2026. Cited figures are marked; the original filing is the authoritative source.
Costco Wholesale Corporation reported strong performance for the second quarter and the first half of fiscal year 2026.
Net sales increased by 9% year-over-year for both periods, driven by a healthy 7% increase in comparable sales and contributions from new warehouse openings. Membership fee revenue also saw a robust 14% increase, boosted by both new member acquisition and recent membership fee adjustments. Profitability improved, with net income rising to $2.035 billiona ($4.58 per diluted share) in the second quarter and $4.036 billion ($9.08 per diluted share) for the first half.
This growth was supported by an increase in gross margin percentage, despite a slight rise in SG&A expenses as a percentage of net sales. The company continues to invest in growth, with significant capital expenditures planned for new warehouse openings and digital initiatives. Overall, Costco demonstrates continued operational strength and effective execution of its membership-based business model.
02—Key points
Key Highlights
- Net sales increased by 9% to $68.24 billion for the second quarter and 9% to $134.22 billion for the first half of fiscal 2026, compared to the prior year.
- Comparable sales grew by 7% for both the second quarter and the first half, indicating strong underlying business performance.
- Membership fee revenue rose by 14% to $1.36 billion for the second quarter and $2.68 billion for the first half, driven by new members and fee increases.
- Net income for the second quarter increased to $2.035 billion, or $4.58 per diluted share, up from $1.788 billion, or $4.02 per diluted share, in the prior year.
- Diluted earnings per share for the first half of fiscal 2026 were $9.08, an increase from $8.06 in the prior year.
- The company opened 4 new warehouses (3 net new) in the second quarter and plans significant capital expenditures of approximately $6.5 billion for fiscal 2026, including new warehouse openings and digital investments.
- Cash flow from operations was strong, providing $7.68 billion for the first half of fiscal 2026, enabling continued investment and shareholder returns.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2026, Costco Wholesale Corp kept $0.03.
- Revenue$69.60B100.0%
- Cost of revenue−$60.72B87.2%
- Gross profit$8.88B12.8%
- Operating costs−$6.27B9.0%
- Operating income$2.61B3.7%
- Interest, other & tax−$571.0M0.8%
- Net income$2.04B2.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2026filed March 11, 2026Financial Statements
Q2 FY2026 against Q2 FY2025
| Line item | Q2 FY2026Q2 FY2025 | Change |
|---|---|---|
| Revenue | $69.60B$63.72B | +9.2% |
| Cost of Revenue | $60.72B$55.74B | +8.9% |
| Gross Profit | $8.88B$7.98B | +11.3% |
| SG&A Expenses | $6.27B$5.66B | +10.8% |
| Operating Income | $2.61B$2.32B | +12.5% |
| Interest Expense | $33.00M$36.00M | −8.3% |
| Net Income | $2.04B$1.79B | +13.8% |
| EPS (Basic) | $4.58$4.03 | +13.6% |
| EPS (Diluted) | $4.58$4.02 | +13.9% |
| Shares Outstanding (Basic) | 443.95M443.98M | 0.0% |
| Shares Outstanding (Diluted) | 444.42M444.89M | −0.1% |
05—Questions
Frequently Asked Questions
What drove the increase in net sales?
Net sales increased by 9% for both the second quarter and the first half of fiscal 2026. This growth was primarily driven by a 7% increase in comparable sales, attributed to a 4% increase in average ticket and a 3% increase in shopping frequency. Sales at 27 net new warehouses opened since the end of the second quarter of fiscal 2025 also contributed to the overall increase.
How did membership fees perform, and what's contributing to the growth?
Membership fee revenue increased by a strong 14% for both the second quarter and the first half of fiscal 2026. This growth was fueled by new member sign-ups and the recent membership fee increases implemented in the U.S. and Canada effective September 1, 2024. Approximately 35% and 40% of the membership income growth in the second quarter and first half, respectively, was from these fee increases.
What is the company's outlook on capital expenditures and expansion plans?
Costco plans to invest approximately $6.5 billion in capital expenditures for fiscal year 2026. This investment will support the opening of new warehouses, remodeling of existing locations, expansion of its depot network, and further development of its digitally-enabled businesses. The company opened 12 new warehouses (including two relocations) in the first half of the fiscal year and plans to open an additional 21 new warehouses in the remainder of fiscal 2026.
How is the company managing its expenses relative to sales growth?
While net sales and comparable sales are growing, Selling, General and Administrative (SG&A) expenses as a percentage of net sales saw a slight increase. For the second quarter, SG&A as a percentage of net sales increased by 13 basis points, and excluding gasoline price deflation, it increased by 8 basis points. This was attributed to factors like self-insured general liability claims expense and higher preopening costs. However, the company's gross margin percentage also increased, helping to offset some of the SG&A pressure.
06—Continue