Costco’s primary gift card provider filed for bankruptcy this month, exposing the retailer to a multi-million-dollar liability on unredeemed cards. Management is reviewing its reserve methodology and may need to record a write-down against deferred revenue if these gift card obligations cannot be recovered.

After distributing a $10 per share special dividend in January 2023, Costco has seen several years of strong cash flow expansion that underpins its shareholder return policy. Investors are now watching for another special payout in 2026, given the company’s history of returning excess capital every few years and its sustained free cash flow growth.