Can Costco (COST) stay resilient towards tariff headwinds this yr?

Costco Wholesale Company (NASDAQ: COST) this week reported larger gross sales and revenue for the third quarter, regardless of tariff-related challenges. Although the warehouse big’s inventory skilled weak point quickly after the announcement on Thursday, it gathered momentum within the after-hours and maintained the uptrend within the following session. Heavy reductions and aggressive pricing assist the corporate drive visitors to its shops at the same time as most retailers battle to handle price strain.

Inventory Beneficial properties

This week, the inventory traded barely above the $1,000 mark, larger than its 52-week common value. COST will doubtless proceed gaining momentum, with the potential to interrupt previous its February peak. The shares skilled volatility this yr after gaining steadily within the early weeks. The worth has practically doubled previously two years, making the inventory seem costly at its present value.

Within the third quarter, revenues rose to $63.2 billion from $58.5 billion within the corresponding interval final yr. Comparable gross sales, a key measure that excludes the results of retailer opening and closure, grew 5.7% year-over-year, and e-commerce gross sales climbed 14.8%. Web earnings was $1.90 billion or $4.28 per share within the Might quarter, in comparison with $1.68 billion or $3.78 per share in Q3 2024. The underside line exceeded Wall Avenue’s expectations, after lacking within the prior quarter.

Price Stress

The optimistic Q3 final result displays measures adopted by the Costco management to sort out tariff-related headwinds, together with provide chain changes to reduce the affect of upper prices. The corporate is transferring extra gadgets to regionally sourced manufacturing to scale back price and is sourcing extra American-made items within the US. Curiously, merchandise prices elevated solely 7% within the third quarter regardless of the associated fee strain, and margins remained wholesome.  

From Costco’s Q3 2025 earnings name:

“We’re remaining agile as a scenario with tariffs evolves, whereas additionally supporting the commitments we’ve made with our long-term suppliers. For example of this, through the third quarter, we rerouted many items sourced from international locations with massive tariff publicity to our non-U.S. markets. Within the U.S., we pulled ahead some gadgets that we had deliberate for the summer season and sourced extra regionally produced items to scale back tariff impacts and be certain that we have been in inventory. Actions corresponding to these are permitting us to proceed to supply nice values for our members, whereas additionally delivering worth to our shareholders.”

In Progress Mode

Costco continues to broaden its retailer community, demonstrating its resilience to headwinds like client spending cuts and financial uncertainty. After opening 9 warehouses in the newest quarter, the corporate plans to open ten models within the fourth quarter to satisfy the goal of 27 new warehouses for the entire of FY25. That, along with the usage of superior expertise to boost buyer expertise, ought to assist the enterprise successfully sort out current challenges. Additionally, the retailer’s distinctive membership-based working mannequin gives a aggressive benefit.

Shares of Costco traded up 4% on Friday afternoon, after opening the session larger. The inventory has grown about 14% for the reason that starting of 2025.