◆ Inside the Latest Quarter (Q3 FY2026)

The twelve weeks to 10 May 2026 produced the fastest revenue growth Costco has reported in some time and the least convincing mix behind it.

The headline. Total revenue $70,527 million, up 12%; net sales $69,154 million, also up 12%; membership fees $1,373 million, up 11%. Operating income $2,815 million against $2,530 million. Net income $2,192 million and diluted earnings per share $4.93 against $4.28, up 15%¹. Comparable sales rose 10% company-wide, with the United States at 9%, Canada 11% and Other International 11%.

Now the composition, which Costco discloses in detail and which changes the reading entirely. Comparable sales excluding fuel prices and currency were 7%, not 10%². Higher gasoline prices added $1,367 million to net sales — 221 basis points — on a 20% rise in the average price per gallon, and currency added a further 104 basis points. Warehouse ancillary and other businesses grew 29%, led by gasoline and pharmacy, while core merchandise categories grew 7%.

Most importantly, the split between the two drivers of comparable sales inverted. Average ticket contributed approximately 7 points and shopping frequency approximately 2. In fiscal 2025 the same split was 1 point of ticket and 5 of frequency³. Costco grew this quarter because things cost more, not because members came more often — and frequency is the component that renews a membership.

Gross margin fell 21 basis points to 11.04%; excluding gasoline price inflation it was 11.26%, up one basis point. Inside that, core merchandise subtracted 29 basis points, primarily foods and sundries and fresh foods, offset by 14 basis points from ancillary businesses — mainly pharmacy and e-commerce — a smaller LIFO charge, and the co-branded credit card programme. The profitable growth came from the periphery; the centre gave margin back.

Two membership numbers are worth keeping. Paid memberships reached 82.9 million from 79.6 million, and total cardholders 148.5 million from 142.8 million. But renewal rates slipped to 92.2% in the United States and Canada and 89.7% worldwide, from 92.3% and 89.8% at the fiscal year end — attributed by Costco to a higher number of memberships sold online through digital promotions, which renew at a slightly lower rate. The fee increase of September 2024 contributed about 25% of membership income growth in the quarter, down from 35% across thirty-six weeks: the step is decaying on schedule.

Digitally-enabled comparable sales rose 21%. Cash and short-term investments reached $19,996 million; the quarterly dividend was raised to $1.47 from $1.30⁴.

A good quarter, then, with a warning inside it: the two figures that actually forecast the next five years — frequency and renewal — both moved the wrong way, while the two that flatter this one, fuel prices and currency, are borrowed.