Costco stock sinks after US same-store sales miss forecasts as consumers weigh value push, tariff pressures

Costco's stock declined over 2% following its Q4 earnings, primarily due to U.S. same-store sales growing 6%, slightly missing the 6.1% forecast, despite overall revenue and adjusted EPS exceeding Wall Street expectations. While annual results and total same-store sales also beat estimates, management highlighted consumer selectivity in discretionary spending and acknowledged growing competition, specifically mentioning Amazon's expanded delivery services, which has contributed to the stock's year-to-date underperformance. Notably, membership fee income increased by a robust 14%.

Analysis

Costco's (COST) fourth-quarter results present a mixed picture, where headline beats on revenue and earnings were overshadowed by a specific operational miss, triggering a negative market reaction. The stock's decline of over 2% was primarily driven by U.S. same-store sales growth of 6.0%, which fell just short of the 6.1% consensus forecast, indicating high investor sensitivity to domestic performance. This occurred despite total revenue reaching $86.16 billion and adjusted EPS hitting $5.87, both exceeding expectations. Overall same-store sales grew 6.4%, beating the 6.2% forecast, buoyed by strong international results, particularly an 8.3% expansion in Canada. Management commentary highlights a cautious consumer who is prioritizing value-oriented staples over discretionary items, a trend confirmed by strong sales of its signature low-cost products. A critical headwind is the intensifying competitive landscape; an analyst from Oppenheimer directly linked Costco's recent stock underperformance—flat year-to-date versus the S&P 500's 13% gain—to Amazon's same-day delivery rollout. Despite these pressures, the company's core business model remains robust, evidenced by a 14% year-over-year increase in high-margin membership fee income and a 6.1% rise in cardholders.

Key Decisions for Investors

• Investors should closely monitor Costco's U.S. same-store sales figures in upcoming quarters, as the market has demonstrated extreme sensitivity to this metric as a key indicator of domestic consumer health and competitive standing.
• The competitive threat from Amazon's expanding delivery services is a significant factor weighing on the stock; it is crucial to evaluate Costco's strategic responses to this encroachment on its traditional value proposition.
• Given the stock's year-to-date underperformance, the strong 14% growth in high-margin membership fees could present a case for long-term holders, suggesting the market may be overly focused on near-term sales figures rather than the durable, recurring revenue stream.
• The bifurcation in consumer spending, with strong demand for value staples but weakness in discretionary categories, suggests that any position should be weighed against the risk of a broader slowdown in non-essential retail spending.