Key Takeaways
- Net sales $68.24B (+9.1% YoY) modestly beat consensus of $67.85B; GAAP diluted EPS $4.58 (+13.9% YoY) edged the $4.55 consensus on operating leverage and a 17 bp gross margin tailwind.
- Total comparable sales accelerated to +7.4% (+6.7% ex-gas/FX), the strongest quarterly comp in over a year. U.S. comps +7.5% reported (+6.6% ex-gas), Canada +5.6%, Other International +9.5% (+8.0% ex-FX).
- Digitally-enabled comparable sales jumped +22.6% (+21.7% ex-FX) — roughly triple the brick-and-mortar comp — as Costco Logistics, the redesigned Costco app, and big-and-bulky delivery scaled. E-commerce now accounts for ~9% of revenue but contributes disproportionately to incremental traffic.
- Membership fee income $1.36B (+13.6% YoY); roughly one-third of growth came from the September 2024 U.S./Canada fee hike, with underlying ex-fee-hike growth of ~7.5%. Paid memberships reached 40.4M households (+9.5%); cardholders 147.2M (+4.7%).
- U.S./Canada renewal rate 92.1% (-10 bps QoQ); global renewal 89.7% (flat QoQ). The modest sequential drift reflects the post-fee-hike cohort and digital-only sign-ups, consistent with management’s prior commentary; we remain comfortable that renewals are structurally healthy.
- Gross margin 11.02% (+17 bps YoY; +11 bps ex-gas-deflation). Core-on-core margin +22 bps with broad-based gains across non-foods, food & sundries, and fresh; offset partially by SG&A rate of 9.19% (+13 bps YoY) on wage investment and digital build-out.
- CEO Ron Vachris confirmed Costco joined the multi-company suit against the U.S. government to preserve refund rights on the IEEPA tariffs that the Supreme Court struck down; if refunds materialize, they will be channeled into member price reductions.
- Maintain BUY; raise PT to $1,100 (from $1,025) on margin expansion, ecommerce acceleration, and membership economics. COST remains a core consumer staples holding despite a ~52x trailing P/E — premium is supported by a recurring, capital-light, compounding model.
Snapshot
| Metric | Q2 FY26 Actual | Consensus / Prior | Variance |
|---|---|---|---|
| Net sales | $68.24B | $67.85B | +0.6% / +9.1% YoY |
| Total comparable sales | +7.4% | +6.6% | +80 bps beat |
| GAAP Diluted EPS | $4.58 | $4.55 | +0.7% / +13.9% YoY |
| Membership fee income | $1.36B | $1.34B | +1.5% / +13.6% YoY |
| Gross margin | 11.02% | 10.95% | +7 bps vs. cons / +17 bps YoY |
| Operating income | ~$2.61B | ~$2.55B | +2.4% / +12% YoY |
What’s in the full report
The PDF (~14-page report) includes the full narrative, charts, and detailed analysis across:
- Detailed Results — Q2 FY2026
- Comparable Sales Detail
- Membership — The Engine
- Renewal Rates
- Guidance & Outlook
- Investment Thesis — Updated
- What’s changed since our last update
- Risks
- Catalysts (next 90 days)
- Warehouse Footprint
- Valuation & Estimates
- Estimate revisions
- Scenario analysis
- Bottom Line
The web page is a free preview. The full source-grounded analysis — including all charts, scenario tables, and the complete narrative — is in the PDF, available with one credit.