Costco's profits rise as pizzas, pies and Black Friday see record sales

By Claudia Assis

Latest quarter shows appeal of Costco's playbook, as profit and sales rose above expectations

A Costco store in Citrus Heights, Calif. The company's profit in the latest quarter topped Wall Street's expectations.

Costco Wholesale late Thursday reported better-than-expected profits for its latest quarter, even as sales barely rose above Wall Street's expectations, as shoppers flocked to its warehouses to shop for pizzas and pies and to score Black Friday bargains.

Costco (COST) said its fiscal first-quarter sales rose 8% to $65.98 billion, from $60.99 billion in the year-ago quarter. Including membership fees, Costco reported revenue of $67.3 billion, just above Wall Street's expectations of $67.14 billion.

In a call with analysts following results, Costco gave investors some color around its successes in the quarter. Its U.S. food courts set a Halloween record in pizzas, selling 358,000 whole pizzas that day, an increase of 31% over last year's Halloween.

Costco's U.S. bakeries also set a pie record in the three days leading to Thanksgiving, selling 4.5 million pies, or more than 7,000 pies per warehouse over that three-day period, the company said.

And this year's Black Friday was another record-breaking day for the company's online sales, with the business generating more than $250 million in non-food orders, the company said.

"Our relentless focus on quality, value and newness continued to deliver market share gains across virtually all departments," Chief Financial Officer Gary Millerchip told analysts on the call.

Investors didn't seem overly impressed, however, as the stock slipped 0.3% in premarket trading on Friday. It had bounced 1.2% on Thursday ahead of the earnings report, after closing the previous session at the lowest price since Oct. 31, 2024.

Oppenheimer analyst Rupesh Parikh indicated that while the results were generally in line with expectations, that doesn't mean investors should be disappointed.

"For longer-term players, we would take advantage of any dips from here," Parikh wrote in a note to clients. "Looking forward, we still see the potential for a special dividend and/or a stock split, which could represent positive catalysts for shares, in our view."

Costco said it has fewer items on sale this holiday quarter than in previous years, as tariffs put in place by the Trump administration pushed some products beyond the retailer's cost-savings proposition.

"Our buyers have sourced a number of alternative great value items," including seasonal food and health and beauty items, Millerchipe said. "In many cases, these items are produced in the U.S. and are largely not impacted by tariffs."

Costco earlier this month sued the Trump administration over tariffs, seeking a refund if the tariffs are overturned by the U.S. Supreme Court.

Inflation "remained relatively consistent," Millerchip said. Inflation impacted prices of beef, seafood and coffee, but that was offset by lower inflation in eggs, cheese, butter and produce. In non-food items, Costco saw low-single-digit inflation for the third consecutive quarter, mostly thanks to gold and imported goods.

The mega retailer reported profit of $4.50 a share, compared with $4.04 a share in the year-ago quarter. Analysts polled by FactSet were looking for profit of $4.27 as share for the quarter.

This year's results included a tax benefit of $72 million, or 16 cents a share, related to stock-based compensation, which last year was 22 cents a share, Costco said.

Same-store sales also came in ahead of expectations, showing 6.4% growth whereas the FactSet consensus called for 6% growth. The stock fell 0.7% in the extended session, however.

Costco's stock turned negative for the year a week ago, as some on Wall Street worried about the company's comparable-store sales slowing down in November.

The stock is down a little over 4% this year through Thursday, contrasting with gains of about 17% for the S&P 500 index SPX.

The company hasn't had a spotless record of pleasing investors with its results, as the stock has declined by an average of just under 4% the day after earnings were released in five of the past seven quarters. The two gains during that time were by an average of around 1.6%.

-Claudia Assis

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12-12-25 0758ET