Costco Wholesale Corp Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Michael Lasser - UBS AG - Analyst : Good evening. Thank you so much on taking my questions. On one of the observations that the market has is under your tenure, Costco's had a greater willingness to move with speed, embrace technology in a different modes of retail and came a bit more than in the past. Is that a fair conclusion? And given the benefits of these actions that you're taking which is greater productivity and efficiency, would you be willing to continue to let the financial benefits fall to the bottom line? Or do you see a greater need to reinvest back in the business in areas like to continue to drive the talk, right?

Question: Christopher Horvers - JPMorgan Chase & Co - Analyst : Hey, good evening, guys, So quick follow-up on the latter and then the full work question and then a second question. So as you think about results recently, they're strong in absolute standards. I think the market holds you to very high standards. Is there any concern that you see on the traffic side where there's more of an impetus to invest in price? And then secondly, it looks like executive members per week grew at an accelerated pace from 4Q to 1Q. How are you looking at that in terms of the overall benefit of extending the hours both in terms of the lift that you're seeing in sales? And is this also driving accelerated sign-up.

Question: Simeon Gutman - Morgan Stanley & Co Ltd - Analyst : Good morning, guys. My question is on warehouse openings in the US, I think we're going to get to the highest number, something like 20 years next year. So do you do anything different from a membership perspective? I know we're lapping some of the short-term promotions that you did on membership. Is there anything you do different as you approach next year?

Question: Oliver Chen - Cowen and Company LLC - Analyst : On the technology side, it's been really exciting. As we think about retail media, are plenty of companies that really want to work with you deeply on digital advertising. Would love your thoughts there. And also as you approach the marketplace in a customer-centric way, you love to have your thoughts on that development. And finally, AI and gas. AI has so many applications across the customer experience as well as employees and inventory management. What's on your road map for how that will innovate your business going forward?

Question: Charles Grom - Gordon Haskett Capital Corp - Analyst : In your annual report, your sales waterfall chart is impressive. The class of '25, $192 million in sales versus $150 million in 2023. Can you help us think about the opportunity to continue to expand on this front and the steps you're taking to continue to improve productivity within the store? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 11, 2025 / 10:00PM, COST.OQ - Q1 2026 Costco Wholesale Corp Earnings Call

Question: Kate McShane - Goldman Sachs Group Inc - Analyst : The renewal -- the renewal rate softness sounded better than what you expected. Could you maybe talk to some of the things you did to try and offset the softness from the more digital numbers?

Question: Peter Benedict - Robert W. Baird & Co Inc - Analyst : I want to ask about digital. Maybe if there's any metrics you guys can share with the success you're having, maybe the -- how many -- what percentage of the membership that's engaging with you digitally now versus before? I don't think I may have missed it, but any stats around Costco Logistics. How you're doing with delivery there.

Question: Rupesh Parikh - Oppenheimer & Co Inc - Analyst : Good afternoon, thanks for taking my questions. I just want to go back to the comments on SG&A leverage. So it sounds like this quarter, higher health care costs prevented your team from leveraging costs. So just curious about the dynamics there. And then as you think about productivity, just how do you think about the runway there? It sounds like it could continue for a few more quarters. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 11, 2025 / 10:00PM, COST.OQ - Q1 2026 Costco Wholesale Corp Earnings Call

Question: Gregory Melich - Evercore Inc - Analyst : Gary, I think you mentioned that inflation was running similar. I just wanted to make sure I got the numbers right. It was up low single digits in general merchandise. Was food inflationary or not in the quarter? And how do you see that trending?

Question: Gregory Melich - Evercore Inc - Analyst : It -- would it be fair to say that most of the ticket growth in comp was driven by inflation?

Question: Zhihan Ma - Sanford C Bernstein & Co LLC - Analyst : Hi, thank you for taking my question. So on the non-food side of things, I think your comp is now in the mid-single-digit percentage range. Can you just update us on when you expect to end that, the tough comps from the gift card sales? And does that timing coincide with the tax refunds or the incremental ones that consumers are going to get especially middle to higher income consumers early next year, will you start to see some more outsized benefit in that category?

Question: Kelly Bania - Bank of Montreal - Analyst : I was hoping to go back to the topic of renewal rates a little bit. I know you don't prefer to guide or forecast, but I think you did say, Gary, we might see still a decline in the renewal rate in the next few quarters. So I was just wondering if that's a little bit of conservatism because it sounds like you are having some success on mitigating that dynamic. Just wondering if you could comment on that. But also if you were to pull out that cohort of the younger members would the membership rates be improving, excluding that? Or can you share any of a deeper dive on that renewal rate dynamic?

Question: Spencer Hanus - Wolfe Research LLC - Analyst : Good evening. Thanks for the question. Just curious if you could talk about the cadence of comps you saw through November and then into December. And how that's informing how the consumer is holding up heading into the holiday from your vantage point? And then are you seeing any trade down or divergence in performance by customer cohort that is changing how you guys are buying?