Costco Sees 11.5% Q3 Revenue Rise, Margins Slip to 11.04%
COST•Costco’s Q3 revenue rose 11.5% driven by record gas volumes and expanded same-day delivery in Spain and France, while membership growth slowed to 4.1% (7% ex-fees/FX). Gross margin contracted to 11.04% from 11.25%, yielding a forward P/E of 48.5 and spurring a hold recommendation.
1. Q3 Financial Performance
Costco’s Q3 revenue increased 11.5% year-over-year, driven by record gas volumes and growth in digital sales. However, gross margin contracted to 11.04% from 11.25%, reflecting higher transportation costs and reduced margins on fresh food.
2. Membership Trends and Digital Enhancements
Membership growth slowed to 4.1%, or 7% excluding fee increases and foreign exchange effects, as warehouse openings in new markets paused. The company enhanced its mobile wallet and launched same-day delivery in Spain and France to boost retention and digital engagement.
3. Valuation Outlook and Analyst Recommendation
With a forward P/E of 48.5, analysts see limited near-term margin expansion opportunities. The compressed profit margins and high valuation have led to a hold recommendation pending clearer growth catalysts.
