This week, Costco Wholesale Corporation (NASDAQ: COST) reported an increase in sales and profits for the third quarter despite tariff-related challenges. The warehouse giant stock experienced weakness shortly after it was announced on Thursday, but it gained momentum outside of business hours and maintained an uptrend in the next session. Massive discounts and competitive pricing help companies drive traffic to their stores, despite most retailers struggling to manage cost pressures.
Inventory profit
This week, the stock traded slightly above $1,000, which is higher than the 52-week average price. Costs could continue to gain momentum as they could break past the February peak. The stock experienced volatility this year after steadily increasing in the early weeks. This value has almost doubled over the past two years, making stock appear more expensive at current prices.
In the third quarter, revenue rose to $63.2 billion from $58.5 billion in response period last year. Equal sales, an important measure to rule out the impact of store openings and closings, increased by 5.7% year-on-year, while e-commerce sales increased by 14.8%. Net income was $19 billion or $4.28 per share in the May quarter, compared to $1.68 billion or $3.78 per share in the third quarter of 2024.
Cost pressure
Positive Q3 results reflect the measures adopted by Costco leadership to tackle tariff-related headwinds, Includes supply chain adjustments to mitigate the impact of higher costs. The company is moving more items to locally produced production to reduce costs and source more American-made goods in the United States. Interestingly, despite cost pressure, product costs only increased 7% in the third quarter, and margins remained healthy.
From Costco’s third quarter 2025 revenue call:
“As a situation with tariffs has evolved and we support our commitment with long-term suppliers, we are still agile. As an example from the third quarter, we re-routed many products from countries with large tariffs exposed to markets outside the US. We continue to provide great value to our members and provide value to our shareholders.”
In growth mode
Costco continues to expand its store network, showing resilience to headwinds like reduced consumer spending and economic uncertainty. After opening nine warehouses in the most recent quarter, the company plans to open 10 units in the fourth quarter to meet its targets for 27 new warehouses across FY25. This should help businesses effectively tackle current challenges, along with enhancing customer experiences using advanced technology. Additionally, the retailer’s distinctive membership-based operating model offers a competitive advantage.
Costco’s shares rose 4% on Friday afternoon after surpassing the session. Stocks have grown by about 14% since the beginning of 2025.
