01—Abstract
Summary
Summary of the 8-K filed May 29, 2025. Cited figures are marked; the original filing is the authoritative source.
Costco reported third-quarter fiscal 2025 results (12 weeks ended May 11, 2025) with net sales up 8.0% to $61.96 billiona and diluted EPS up 13.2% to $4.28, from $3.78 a year earlier.
Net income rose to $1.90 billionb. For the first 36 weeks, net sales grew 8.2% to $185.48 billion and diluted EPS reached $12.34 versus $11.27. Total company comparable sales were 5.7% for the quarter as reported and 8.0% excluding gasoline price and foreign exchange effects, which points to solid underlying demand despite headwinds from lower gasoline prices and currency movements.
Profitability and membership were the main drivers. Gross margin expanded 41 basis points to 11.25%c, or 29 basis points excluding gasoline, led by core merchandise and other business gains. SG&A improved 20 basis points to 9.16%, though it included a one-time vacation accrual tied to a new employee agreement.
Membership fees rose 10.4% to $1.24 billiond, with 79.6 million paid members (up 6.8%), a 90.2% worldwide renewal rate, and 37.6 million executive members. E-commerce comparable sales grew 14.8% (15.7% adjusted), with digital traffic up 20%. Balance sheet and cash flow remained strong.
Cash and equivalents increased to $13.84 billion from $9.91 billion at fiscal year-end 2024, and operating cash flow for the 36 weeks was $9.47 billion. Capital expenditures rose to $3.53 billion, consistent with continued warehouse expansion.
Cash dividend payments were $1.03 billion, down sharply from $8.53 billion in the prior-year period, which included a special dividend. The filing is an earnings release under Item 2.02 and contains no new guidance, leadership changes, or material transactions beyond the reported results.
02—Key points
Key Highlights
- Q3 FY2025 net sales rose 8.0% to $61.96B; total company comparable sales were +5.7% as reported and +8.0% adjusted for gasoline and FX.
- Q3 diluted EPS of $4.28 grew 13.2% year over year; 36-week diluted EPS of $12.34 was up from $11.27.
- Membership fees increased 10.4% to $1.24B, with 79.6M paid members (+6.8%) and a 90.2% worldwide renewal rate.
- E-commerce comparable sales grew 14.8% (15.7% adjusted), with site traffic up 20% and Costco Logistics deliveries up 31%.
- Gross margin expanded 41 bps to 11.25% (+29 bps excluding gasoline), while SG&A improved 20 bps to 9.16% despite a one-time vacation accrual.
- Cash rose to $13.84B and operating cash flow reached $9.47B for 36 weeks, while capex increased to $3.53B to support expansion.
- Dividend payments fell to $1.03B from $8.53B a year earlier, which reflects the prior-year special dividend rather than a change in the regular dividend run rate.
03—Questions
Frequently Asked Questions
How strong was Costco's underlying sales growth after adjusting for gasoline and currency?
Adjusted total company comparable sales grew 8.0% in Q3, compared with 5.7% as reported. The gap reflects lower gasoline prices and foreign exchange effects. U.S. adjusted comparable sales rose 7.9%, Canada 7.8%, and other international markets 8.5%. Comparable traffic grew 5.2% and comparable ticket rose 2.7% on an adjusted basis.
Is Costco's membership model still growing and retaining customers?
Yes. Membership fee income rose 10.4% to $1.24B (11.4% excluding FX). Paid members reached 79.6M, up 6.8%, and total cardholders reached 142.8M, up 6.6%. The worldwide renewal rate was 90.2%, and the U.S. and Canada renewal rate was 92.7%. Executive members reached 37.6M and accounted for 73.1% of sales penetration.
Did anything unusual affect Q3 margins or expenses?
Yes. SG&A included a one-time vacation accrual tied to a new employee agreement effective March 2025, which reduced SG&A by about 2 basis points on the total company margin. Gross margin benefited from core operations and other businesses, partly offset by a 23 basis point LIFO charge. Excluding gasoline effects, gross margin improved 29 basis points.
How did cash flow and capital spending change?
Operating cash flow for the 36 weeks rose to $9.47B from $8.38B. Capital expenditures increased to $3.53B from $3.13B, reflecting ongoing investment in warehouses. Cash and equivalents ended at $13.84B, up from $9.91B at fiscal year-end 2024. Share repurchases were $623M for the period.
Does the filing include guidance or new warehouse plans?
The filing includes no formal financial guidance. It does include a warehouse expansion schedule showing 890 warehouses at fiscal year-end 2024 and a projected 914 by fiscal year-end 2025, with 905 open as of the report date. Management's forward-looking statements carry the standard risk disclaimers, and the company does not undertake to update them except as required by law.
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