Dive Brief:
- Costco recorded an 11.6% increase in net sales during the third quarter of fiscal 2026 — the company’s strongest quarter as measured by sales growth in almost four years. Net sales came in at just over $69 billion, up from $62 billion during the same period a year ago.
- The club retailer posted comparable-store sales growth excluding fuel sales and foreign exchange in the United States of 6.8%, its best showing by that measure since the third quarter of fiscal 2025.
- Interest by shoppers in GLP-1 medications helped propel Costco’s sales during the quarter, as sales of “anything protein” were especially strong, CFO Gary Millerchip said during an earnings call on Thursday.
Dive Insight:
Like other retailers, Costco is seeing growing demand for weight-loss drugs impact its food sales. A private label beef stick the company recently introduced, for example, is “doing tremendous volume and offering tremendous value to our members,” Millerchip said.
In addition, an ultra-filtered protein milk the company recently launched under Kirkland Signature “has just taken off,” President and CEO Ron Vachris said during the earnings call.
“I think our buyers are right on top of the halo effect of GLPs and the needs of the members. And I’m quite impressed with what I’m seeing from the CPGs, the rather big ones, and how they’re pivoting to the future potential opportunities there,” he said. “So there is quite a potential opportunity, and I feel we’re on the front side of that.”
Grocery sales helped drive Costco’s growth during the third quarter, with comparable sales for the food and sundries category up in the mid-single digits, led by packaged foods and candy, Millerchip said. Food sales were held back somewhat by lower egg prices, although “significant growth” in sales of protein snacks and bars partially offset that decline, he said.
Costco saw record-breaking volumes in each month of the quarter, fueled by high consumer price sensitivity stemming from elevated fuel costs, Vachris said.
According to Millerchip, margins for food were down slightly in Q3, in part because the company invested in holding down prices for key items like beef and eggs. “Our goal is to be the first to lower prices where we see opportunities to do so,” he said.
Costco’s gas stations served as a powerful draw during its latest quarter, which ended May 10, with many members buying fuel from the retailer for the first time, Vachris said. The company expects to continue to benefit from that trend since customers who use its fuel stations tend to spend more when they enter the warehouse, he said.
“We’ve widened our gaps in terms of price to make sure we’re there for our members, but we know that’s something that’s very high on our members’ minds,” Millerchip said.
Costco also dealt with higher transportation costs during the period because of higher fuel costs, according to Millerchip.
