COST · Q2 2026 Earnings

Bullish

Costco

Reported March 5, 2026

30-second summary

30-second take: Costco delivered Q2 FY2026 net sales of $68.24B (+9.1% YoY), GAAP EPS of $4.58, operating margin of 3.82% (+12bps YoY on a net-sales basis), and 12-week adjusted comps of 6.7% with digitally-enabled comps of 22.6% — an acceleration from Q1's 20.5%. Reported gross margin came in at 11.02%, up +17bps YoY (+11bps ex-gas deflation). The headline forward signal is what didn't change: FY2026 net new openings reaffirmed at 28, CapEx reaffirmed at ~$6.5B, but the prior disclosure of 5 planned FY2026 relocations (3 US, 1 Canada, 1 Taiwan) silently disappeared from the guidance package. Beneath the steady-state guide, management's tone on tariffs has flipped from Q3 FY2025's hour-by-hour vigilance to explicit positioning as a structural beneficiary of trade dislocation.

Headline numbers

EPS

Q2 FY2026

$4.58

Revenue

Q2 FY2026

$68.24B

+9.1% YoY

Gross margin

Q2 FY2026

11.1%

Operating margin

Q2 FY2026

3.8%

Key financials

Q2 FY2026

Metric	Q2 FY2026	YoY	Q1 FY2026	QoQ
Revenue	$68.24B	+9.1%	$65.98B	+3.4%
EPS	$4.58	—	$4.50	+1.8%
Gross margin	11.1%	—	11.3%	-24bps
Operating margin	3.8%	—	3.7%	+16bps

Guidance

Costco reaffirmed full-year capex and warehouse opening guidance while withdrawing prior disclosure on planned relocations; forward operating momentum remains solid with Q2 FY26 delivering 9.1% YoY revenue growth.

Guidance is issued for both next quarter and the full year. Both may appear below.

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Planned warehouse relocations	FY 2026	5	Withdrawn — no replacement	—	Withdrawn

Reaffirmed unchanged this quarter: Capital expenditure (approximately $6.5 billion), Net new warehouse openings (28 net new openings expected in fiscal year 26; targeting 30 plus per year in coming years)

Platform metrics

Q2 FY2026

Segment	Q2 FY2026
Comparable Sales (12 weeks)	7.4%
Comparable Sales Adjusted (12 weeks)	6.7%
Membership Fees Revenue (12 weeks)	$1,355 million
Total Revenue (12 weeks)	$69,597 million
Warehouse Count	924

Profitability

Q2 FY2026

Segment	Q2 FY2026
Operating Income (12 weeks)	$2,606 million

Management tone

Q3 FY2025 anchor: Tariff vigilance → Q4 FY2025 anchor: Offensive expansion → Q1 FY2026 anchor: Technology as operating model → Q2 FY2026 anchor: Tariffs as offensive positioning.

Three quarters ago tariffs were a daily defensive preoccupation; last quarter they were "largely worked through"; this quarter management has completed the inversion to offense. Ron Vachris: "We believe our expertise in buying and our limited skew count model puts us in a position to manage this as well as anyone." The accompanying playbook — moving country of production, consolidating global buying, leaning on Kirkland Signature, sourcing more domestically — is now framed as structural advantage rather than mitigation. This is a meaningful repositioning: Costco is now telling investors that trade dislocation is a competitive moat, not a margin drag.

Last quarter the digital-membership cohort was a renewal-rate headwind being absorbed; this quarter Gary Millerchip noted the worldwide rate was unchanged from last quarter at 89.7%, and the U.S./Canada rate was down only 10 basis points to 92.1%, attributing the stabilization to digital cohort maturation alongside targeted communications and retention strategies aimed at new online members. Worldwide renewal rate going flat after three quarters of drift is the first concrete data point that the targeted-communications playbook is working at the global level.

Technology framing has evolved from Q1's philosophical pivot to Q2's measurable productivity claim. From prepared remarks, mobile wallet enhancements, pharmacy pay-ahead, and employee pre-scan technology are delivering "meaningful improvements in the speed of checkout" and "employee productivity," with automated pay stations piloting an ~8-second average transaction time. SG&A operations was better by two basis points ex-gas, with management explicitly crediting "efficiency benefits from the technology investments we've recently implemented" as fully offsetting wage investments and extended operating hours. This is technology investments yielding non-linear scaling — volume growth without proportional headcount — which if sustained is a structural SG&A tailwind, not a one-time productivity bump.

The one new hedge worth noting: tariff language was tightened this quarter — "The future impact of tariffs remains extremely fluid" — and management flagged uncertainty around the IEPA refund process. Combined with the Middle East fuel-cost caveat, this is hedging language that wasn't in the Q1 deck. The offensive positioning on tariffs is real, but management is preserving its room to maneuver if the policy environment shifts again.

Recurring themes management leaned on this quarter:

Tariff agility and Kirkland Signature penetration as competitive moatDigital member retention and renewal rate stabilizationTechnology-enabled productivity allowing growth without proportional labor cost inflationReal estate creativity (urban infill, parking decks) enabling 30+ unit/year expansion targetAI visibility and positioning with LLMs as emerging channel for member acquisitionMargin stability through value reinvestment to members rather than shareholder expansion

Risks management surfaced:

Tariff complexity and uncertainty around IEPA refund process and timingMiddle East geopolitical instability potentially impacting fuel costs and shipping schedulesDigital member cohort renewing at lower rates than traditional warehouse membersPharmacy pricing pressures from Medicare maximum fair pricing changesCannibalization from new warehouse openings (noted at ~60 bps in February)

Answers to last quarter's watch list

Whether the Spain delays push openings into FY2027 or get re-baselined — FY2026 net new opening count held at 28 and the "30-plus per year" long-term cadence was reaffirmed with increased confidence from creative real-estate models. The Spain slip appears contained to FY2026 without propagating.

Resolved positively

Q2 FY2026 U.S. comp adjusted vs. Q1's +5.9% — U.S. adjusted comp came in at exactly +5.9%, holding Q1's pace despite a tougher comp. International segments accelerated and now carry the comp upside.

Resolved positively

Digitally-enabled comp sustainability — Came in at +22.6%, an acceleration of +210bps from Q1's +20.5%. The high-teens floor question is decisively answered to the upside; the same-day/services overlay is not one-time mix.

Resolved positively

Renewal rate trajectory — Worldwide rate was flat QoQ for the first time at 89.7%, and U.S./Canada down only 10bps to 92.1%. Management attributed the stabilization to digital cohort maturation plus targeted engagement programs. The drift hasn't ended but the second derivative has turned.

Resolved positively

FY2026 CapEx run-rate vs. the $6.5B guide — FY2026 CapEx reaffirmed at ~$6.5B; Q2 CapEx was $1.29B. The full-year cadence is still difficult to triangulate cleanly given the timing of warehouse builds, depot expansion, and remodel spend, so the question of whether $6.5B reflects pulled-forward Spain or FY2027 prep remains open.

Continue monitoring

Healthcare cost trajectory — Management did not call out healthcare costs as a specific SG&A drag this quarter. With operating margin up +12bps YoY, the gating-factor framing from Q1 was not reiterated, suggesting it's not actively binding.

Resolved positively

What to watch into next quarter

Whether the silent withdrawal of the 5-relocation disclosure shows up as a 28 → 26-27 trim, or whether net new openings hold at 28 and relocations were simply folded into the count — the disclosure framework change is the question

U.S. adjusted comp — does it hold at +5.9% for a third straight quarter or accelerate as tariff-driven Kirkland penetration delivers visible value-shift gains

Other International comp durability — Q2's +13.0% is a sharp acceleration from Q1's +6.8%; watch whether this is sustained or a one-quarter spike from specific country mix

Digitally-enabled comp — Q2's +22.6% sets a higher bar; watch whether Q3 holds north of 20% or whether the same-day/services overlay finally laps

Worldwide renewal rate — does the flat Q2 print extend to a stabilized rate or revert to drift; the digital cohort maturation thesis is fully testable in Q3

Tariff refund (IEPA) timing and magnitude — management called this "not yet clear"; any update would be a margin variable

Core-on-core margin trajectory — Q2 core-on-core was +22bps, helped by deflationary turn benefits and Kirkland penetration; watch whether the back-half compare allows this to extend or whether mix from pharmacy and e-commerce continues to dilute reported core

Sources

Costco Q2 FY2026 earnings press release (Form 8-K, filed March 5, 2026) — https://www.sec.gov/Archives/edgar/data/909832/000090983226000025/costex9918-k3526.htm
Costco Q2 FY2026 earnings call prepared remarks (CFO Gary Millerchip, CEO Ron Vachris)
Costco Q1 FY2026 earnings call and press release (reported December 11, 2025) — for prior-guidance baseline

Get the next brief, free.

We publish analyst-grade earnings briefs the same day or morning after every call — headline numbers, segment KPIs, Q&A highlights, and tone analysis. Free during beta.

This is not investment advice.