Costco Shares Tank After Earnings Beat—Because Wall Street Never Learns

Another quarter, another earnings beat—and yet Costco (COST) stock just got bulldozed. Here’s why the market shrugged off good news like a spoiled rotisserie chicken.

The Numbers Don’t Lie (But Analysts Do)

Revenue up. Margins stable. Membership renewals at ATH. But Wall Street wanted a moonshot—so they punished COST for merely being profitable. Classic.

The Crypto Parallel

Reminds you of Bitcoin dumping after hitting all-time highs, doesn’t it? Traders sell the news even when fundamentals scream ’hodl.’ Some things never change—whether it’s warehouse clubs or decentralized finance.

Bottom Line

Costco’s fine. The market’s broken. Meanwhile, your local crypto degen just bought the dip with leveraged BNB futures. Priorities.

TLDR

• Costco beat Q4 earnings expectations with $4.28 per share versus $4.24 expected, and revenue of $63.2 billion versus $63.1 billion expected
• Sales jumped 8% year-over-year while same-store sales grew 5.7%, slightly below the 6% analyst forecast
• Stock fell 0.4% in after-hours trading despite beating estimates, though shares are up 10% year-to-date
• Company is actively managing tariff impacts by rerouting goods, rushing shipments, and sourcing more products domestically
• Costco absorbed tariff costs on staples like bananas and pineapples but raised prices on discretionary items like flowers

Costco delivered another quarter of solid financial performance that exceeded Wall Street expectations. The warehouse retailer posted earnings of $4.28 per share for its fiscal fourth quarter ended May 11, beating the consensus estimate of $4.24.

COSTCO $COST JUST REPORTED EARNINGS

EPS of $4.28 beating expectations of $4.23🟢
Revenue of $63.2B beating expectations of $63.1B🟢 pic.twitter.com/jtwehXX6dl

— Evan (@StockMKTNewz) May 29, 2025

Revenue reached $63.2 billion, including both net sales and membership fees. This figure topped analyst projections of $63.1 billion.

Sales for the quarter climbed 8% compared to the same period last year. Same-store sales, which exclude the impact of new store openings, increased 5.7%.

This growth rate came in slightly below the 6% same-store sales increase that analysts had forecast. E-commerce sales performed particularly well, rising nearly 16% year-over-year when excluding gas sales and foreign exchange impacts.

Despite the earnings beat, Costco shares dropped 0.4% in after-hours trading Thursday. The stock had initially gained ground immediately following the earnings release before reversing course.

Year-to-date, Costco stock remains up 10%, outperforming the S&P 500’s less than 1% gains during the same period. The stock trades at 56.17 times current fiscal year earnings, reflecting its premium valuation.

Tariff Strategy Takes Center Stage

Company executives spent considerable time on Thursday’s earnings call discussing their approach to managing tariff-related challenges. CEO RON Vachris outlined several tactics the company has implemented to minimize cost impacts.

Costco has rushed shipments to bring goods into the U.S. ahead of tariff implementations. The company has also rerouted products from high-tariff countries to markets outside the United States.

About one-third of Costco’s U.S. sales consist of imported goods. Items imported from China represent approximately 8% of total U.S. sales, according to CFO Gary Millerchip.

The company is working to source more products for its private-label Kirkland Signature brand in the countries or regions where those items are sold. This strategy helps reduce cross-border shipping and associated tariff costs.

Costco’s scale gives it negotiating power with suppliers that smaller retailers lack. The company’s focused product selection means it buys larger quantities of fewer items, strengthening its position in price discussions.

Selective Price Management Approach

Costco has taken a nuanced approach to pricing decisions in response to tariff pressures. The company has absorbed cost increases on some essential items while passing through price increases on others.

For staple products like bananas and pineapples from Central and South America, Costco chose to maintain existing prices. Millerchip explained that the company worked with suppliers and accepted potential margin impacts to protect members from price increases on these basics.

“We felt it was important to really eliminate the impact there for the member by working with our suppliers and by us finding efficiencies and accepting that there may be a margin impact,” Millerchip said during the call.

However, the company increased prices on imported flowers from Central and South America. Executives viewed flowers as discretionary purchases that customers could more easily absorb price increases on.

Despite tariff headwinds, Costco has actually lowered prices on some items including eggs, butter, and olive oil. The company continues to extend gas station hours at its locations to provide additional value to members through discounted fuel.

Net income for the quarter ROSE to $1.90 billion, or $4.28 per share, compared with $1.68 billion, or $3.78 per share, in the year-ago period. Costco does not provide forward guidance since it continues to report monthly sales results throughout the year.