Costco Posts Record Gas Sales and Revenue Beat — The Value Trade Is Working

Costco Wholesale said that its fiscal Q3 sales were $70.53 billion, up from $63.2 billion the previous year and more than the $69.81 billion that Wall Street had predicted. Net income was $2.19 billion, or $4.93 per share. This is up from $1.9 billion, or $4.28 per share, during the same time last year. EPS came in right on target. It beat revenue, not equal it.

On the analyst call, the number that got the most attention wasn't in the income statement. Ron Vachris, CEO of Costco, said that the last five weeks of the quarter, which ended on May 10, were the company's highest-volume petrol weeks ever.

People drove to Costco's gas pumps in numbers the store had never seen before as gas prices went up because of the war in the Middle East and the rising cost of crude oil. Some of them were new members who joined because petrol was cheaper. They were then probably introduced to everything else Costco sells.

"Against the backdrop of ongoing macro uncertainty, our focus is providing quality goods and services at the lowest possible price," Vachris said — a statement that sounds like a tagline but is also, in the current environment, a precise description of why Costco's model is working.

Why a Gas Station Is One of Costco's Most Effective Membership Acquisition Tools

The high petrol volumes aren't just a way to make money; they're also a way to get people to join. On the analyst call, Vachris made the strategy case clear: people who use Costco's gas stations tend to spend more in the warehouse than people who don't; and the low gas prices this quarter brought in new members, who can become loyal in ways other than at the pump.

The process is easy to understand. When a customer finds out that they can save a lot on petrol at Costco, and these savings are obvious and immediate at every fill-up, they have a strong reason to keep their membership.

That tangibility is harder to achieve with most retail value propositions, which require consumers to track savings across dozens of product categories. Gas is simple: the price is posted on a sign visible from the road. You either save money or you don't.

Paid memberships increased by 4.1% during the quarter, which is in line with the trend of steady, slow growth in memberships. Costco has been around for a long time. It was 89.7%, which was higher than what analysts thought would happen and a number that not many membership businesses can beat.

Costco's value proposition is sticky not because of lock-in mechanics but because members who use the warehouse regularly find it genuinely difficult to justify canceling.

Traffic to Costco's website and apps increased 37% year over year, and digital sales increased nearly 21%. These growth rates show that Costco is continuing to spend in its e-commerce capabilities and its partnership with third-party delivery services like Instacart.

The digital growth is also bringing in younger shoppers, though Vachris admitted that younger generations renew their memberships less often than the company's core demographic. This is something that Costco should keep an eye on as its membership base changes.

The Tariff Refund Story and What "First to Lower Prices" Actually Means

Costco has been at the center of a tariff dispute with the Trump administration following a Supreme Court decision that invalidated some of Trump's import levies. The retailer had previously committed to lowering prices if it received tariff refunds — a statement that aligned Costco's commercial positioning with a specific policy outcome in an unusually direct way.

On Thursday, Vachris confirmed the company has begun submitting tariff refund claims and expects to receive approved refunds on a rolling basis over the next few months. The plan is to return those funds to members "in some form" — with specifics dependent on actual refund amounts received.

"Our goal is to be the first to lower prices and the last to raise them," Vachris said. That framing positions Costco's price actions as a reflection of its values rather than a competitive tactic, which is consistent with how the company communicates generally. Whether the tariff refunds ultimately produce visible price reductions that members notice will matter both commercially and for the ongoing narrative around Costco's pricing integrity.

The adjusted comparable sales growth of 6.6% for the quarter reflects a business that is genuinely moving more product at higher per-trip spend, not just benefiting from inflation-driven price increases.

Store visits grew and shoppers spent more per trip — a combination that indicates both traffic expansion and basket size growth simultaneously, which is the healthiest form of comparable sales improvement a retailer can report.

Top Categories Tell a Story About Where Consumer Wallets Are Going

The best-performing categories this quarter were pharmacy, home goods, gold and jewellery, and tires. These categories show how people behave in a high-inflation and politically uncertain world.

Pharmacy growth is structural: an aging membership base with above-average income and health consciousness is a durable demand driver for prescription and over-the-counter products, particularly when Costco's pricing relative to traditional pharmacy chains remains favorable.

Gold and jewelry is the more telling signal. Precious metals have performed strongly in 2026 as investors and consumers have sought inflation hedges and safe-haven assets amid the Middle East conflict and broader macro uncertainty.

Costco's gold sales — which the company began expanding aggressively — have consistently surprised analysts with their volume. The warehouse club selling gold bullion as a routine category reflects something real about where consumer anxiety is directing discretionary spending.

Home furnishings and tires round out a picture of consumers investing in durable goods — replacement cycles, home improvement — rather than discretionary experiential spending.

The pattern mirrors what Walmart and Target both reported last week: wealthier households are still opening their wallets, while lower-income consumers are increasingly cautious. Costco's membership skews toward the former demographic, which provides insulation from the demand softness affecting value-oriented retailers targeting lower-income shoppers.

The Consumer Resilience Debate — What Costco's Numbers Contribute

Costco's Q3 results land in the middle of an active debate about whether U.S. consumers are holding up or quietly pulling back. The data from the quarter supports a specific and nuanced read: affluent consumers remain resilient, membership loyalty is high, and macro uncertainty is actually driving consumers toward value rather than away from spending entirely.

The record gas volumes are the clearest expression of that dynamic. Consumers under fuel price pressure didn't stop driving — they optimized where they bought gas. That's behavioral adaptation in response to cost pressure, not demand destruction. And Costco, with its consistently lower fuel prices, was the direct beneficiary of that optimization.

The 15% year-to-date stock gain through May 28 reflects a market that has been pricing Costco as a beneficiary of macro uncertainty rather than a victim of it — the same thesis that drove outperformance during the 2022 inflation surge and the early COVID period.

The model's combination of membership economics, limited assortment, and relentless price discipline produces results that tend to hold up specifically when the external environment is challenging.

Adjusted comparable sales growth of 6.6%, on top of a year with high comparable growth, shows that the baseline isn't falling apart. There are a lot of stores competing for market share, but Costco is rising from a strong base.

The rise of e-commerce, the pipeline for getting new customers at petrol stations, and the momentum in the pharmacy and precious metals categories all point to more than one growth vector at work at the same time, rather than a single driver that could stop.

What Comes Next for Costco

The tariff refund situation is the near-term variable with the most potential to generate a visible consumer reaction.

If Costco gets meaningful refunds over the next few months and passes them on to members in the form of lower prices on certain items, especially in categories where tariff exposure was highest, the price cuts will make members more loyal and get media attention, which serves as marketing.

The membership growth trajectory is the slow-moving indicator that matters most for the long-term thesis. At 4.1% paid membership growth and 89.7% renewal rates, Costco is expanding its installed base steadily without compromising the quality of membership economics.

The plan behind Costco is meant to create an organic flywheel that brings in new members through petrol station discovery and then turns them into full-on warehouse shoppers.

The e-commerce partnership with Instacart and the platform's broader digital expansion represent the demographic bridge between Costco's core older, wealthier membership and the younger shoppers the company needs to sustain growth over the next decade. Younger member renewal rates are currently lower than the company average — which is a gap that Costco has time to close but can't afford to ignore indefinitely.

The macro environment that produced record gas weeks and strong gold sales isn't going to persist indefinitely. When oil prices normalize and the Middle East situation resolves, some of the demand tailwinds specific to the current quarter will fade.

The membership base that Costco built during the disruption time is something that will last, and that, more than any single quarter's petrol volumes, is what the business is building up.