Meet the 6 Categories That Drove Costco’s 19.5% Digitally Enabled Sales Comps in Its Latest Quarter.

Costco reported fiscal Q4 2026 revenue of $95.7 billion, up 11% year over year and above the roughly $94.9 billion consensus, while GAAP EPS rose nearly 15% to $6.75 versus $6.55 expected. Comparable sales increased 6.7% excluding gasoline and FX, led by 7.2% U.S. growth, while digital comparable sales surged 19.5%. EPS included a $0.15-per-share net benefit from tariff refunds; excluding it, EPS growth was approximately 12%, and shares traded roughly flat after hours amid elevated investor expectations.

Analysis

COST’s incremental debate is not headline sales growth but the quality and scalability of digital mix. Online demand concentrated in pharmacy, bulky home goods, electronics and hardlines should raise average ticket and reduce member friction, but fulfillment economics are materially worse than warehouse self-service; absent disclosure of digital penetration, gross-margin contribution and delivery-cost absorption, a 19% digital growth rate is not automatically EPS-accretive. The more investable read is that Costco is extending its member relationship into higher-consideration categories, potentially taking share from WMT, TGT, BBY and WSM over the next 6-18 months.

The modest membership-fee growth relative to sales is the key watch item, since fees carry disproportionately high incremental margin and underpin COST’s premium multiple. If traffic and renewal remain healthy but fee growth decelerates further, the market may reinterpret sales strength as inflation/mix rather than a widening membership moat; that would pressure the multiple even if estimates move modestly higher. Conversely, evidence that digital purchases improve renewal rates or expand annual spend per member would justify another leg of premium valuation.

Near term, a clean earnings beat with limited after-hours follow-through suggests expectations were already elevated and the tariff-related benefit complicates headline EPS quality. We would avoid chasing outright long exposure until management quantifies online profitability or provides evidence that digital is pulling through incremental memberships rather than shifting existing warehouse spend. The contrarian opportunity is in relative value: Costco’s digital success may be more damaging to specialty retailers with weaker membership economics than to broad-line peers that already operate scaled fulfillment networks.

Key Decisions for Investors

• Maintain neutral COST for the next 1-3 months; add only on a 8-10% pullback or after disclosed evidence of stable renewal/member growth and online-margin neutrality. Thesis is invalidated by a second consecutive quarter of decelerating fee income or a meaningful gross-margin giveback tied to fulfillment.
• Initiate a 6-12 month pair trade long COST / short BBY in equal dollar exposure if COST holds post-earnings support: Costco’s member-led electronics proposition can pressure Best Buy’s discretionary-ticket traffic and promotional intensity. Stop if BBY demonstrates sustained comparable-sales acceleration or COST digital growth falls below low teens.
• Watch WMT versus COST rather than treating Costco digital growth as a standalone e-commerce winner. WMT has the superior delivery infrastructure; if Costco’s digital mix expands without margin disclosure, favor WMT on pullbacks as the lower-valuation fulfillment beneficiary.
• Set an alert for the next earnings release: actionable bullish confirmation requires disclosed growth in paid members/renewals and no deterioration in merchandise margin despite digital mix. Without those data, do not underwrite a multiple expansion from online sales growth alone.