01—Abstract
Summary
Summary of the 8-K filed March 5, 2026. Cited figures are marked; the original filing is the authoritative source.
Costco reported fiscal Q2 2026 (12 weeks ended February 15, 2026) with net sales of $68.24 billiona, up 9.1% from $62.53 billion, and net income of $2.035 billion, or $4.58 per diluted share, up from $4.02 a year earlier (about 13.9% growth).
Total comparable sales rose 7.4% reported and 6.7% excluding gasoline price and foreign exchange effects. Traffic grew 3.1% and ticket grew 4.2% (3.5% adjusted), and digitally-enabled comparable sales rose 22.6%. Membership fees grew 13.6% to $1.355 billionb, supported by 82.1 million paid memberships (up 4.8%), a 89.7% worldwide renewal rate, and a 92.1% U.S./Canada renewal rate.
Gross margin improved 17 basis points to 11.02%, and SG&A fell to 9.19% of sales, though management noted a legal settlement benefit and a higher general liability reserve in the quarter. For the four-week February period ended March 1, 2026, net sales were $21.69 billionc, up 9.5%, with total company comparable sales of 7.9% reported and 7.0% adjusted. The filing notes that the timing of Lunar New Year (February 17 this year versus earlier last year) added roughly 4.0% to February Other International sales and about 0.5% to total company sales.
Year-to-date (26 weeks), net sales reached $144.85 billiond, up 8.6%. On the balance sheet, cash and equivalents rose to $17.4 billion from $14.2 billion at fiscal year-end August 2025, and operating cash flow for the 24 weeks was $7.68 billion versus $6.01 billion a year earlier.
Capital expenditures increased to $2.8 billion, and cash dividend payments were $1.15 billion versus $0.52 billion, which the excerpt does not attribute to a specific cause. The company ended the quarter with 924 warehouses and plans to finish fiscal 2026 at an estimated 942.
02—Key points
Key Highlights
- Q2 FY2026 net sales of $68.24B, up 9.1%; total comparable sales up 7.4% reported and 6.7% adjusted for gasoline and FX.
- Net income of $2.04B and diluted EPS of $4.58, up roughly 13.9% from $4.02 a year ago; year-to-date diluted EPS of $9.08 versus $8.06.
- Membership fee revenue rose 13.6% to $1.36B; paid members reached 82.1M (+4.8%) and the worldwide renewal rate was 89.7%, with 92.1% in the U.S./Canada.
- Digitally-enabled comparable sales grew 22.6% (21.7% adjusted), with app visits up 63% and e-commerce site traffic up 32%.
- Gross margin improved 17 bps to 11.02%, while SG&A improved 13 bps to 9.19%, though these figures include a one-time legal settlement benefit and a higher general liability reserve.
- February (four weeks) net sales rose 9.5% to $21.69B, but about 4.0 points of Other International growth reflected the Lunar New Year timing shift.
- Operating cash flow rose to $7.68B for the 24 weeks from $6.01B, while capex increased to $2.82B and cash dividend payments rose to $1.15B from $0.52B.
03—Questions
Frequently Asked Questions
How strong was Costco's underlying sales growth in the quarter?
Total company comparable sales rose 7.4% reported and 6.7% excluding gasoline price and foreign exchange effects. U.S. adjusted comparable sales grew 6.4%, Canada 7.6%, and Other International 7.1%. Traffic rose 3.1% and ticket 4.2%, so growth was driven by both more transactions and larger baskets.
Did one-time items affect the quarter's profitability?
Yes. The company cited a non-recurring legal settlement received in Q2 that helped gross margin and SG&A, and an increase in the general liability reserve for prior-year claims that partly offset it. Management's presentation shows these items separately, so investors should consider them when assessing the underlying margin trend.
How is the membership business performing?
Membership fees rose 13.6% to $1.355B, or 12.2% excluding FX. Paid members reached 82.1M, up 4.8%, and total cardholders reached 147.2M. Executive members numbered 40.4M and accounted for 75.8% of sales penetration. The worldwide renewal rate of 89.7% and U.S./Canada rate of 92.1% indicate stable member retention.
Did the Lunar New Year timing distort the reported results?
Yes. The filing says the shift in Lunar New Year to February 17 (19 days later than last year) added approximately 4.0% to February Other International sales and about 0.5% to total company sales. Investors should treat the February comparison, particularly for Other International, as inflated by timing.
How is the company's financial position and cash generation?
Cash and equivalents increased to $17.4B from $14.2B at fiscal year-end, and long-term debt was stable at $5.7B. Operating cash flow was $7.68B for 24 weeks, which funded $2.82B in capital expenditures and $1.15B in dividend payments. Total equity rose to $32.1B. Costco continues to expand, with 924 warehouses now and an estimated 942 by fiscal year-end 2026.
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