NEW YORK, March 5, 2026, 19:11 EST
- Costco topped quarterly sales and profit expectations and said it could cut prices if tariff refunds arrive
- CEO Ron Vachris said the timing of any refunds was still unclear
- U.S. court moves on refunds and shifting tariff policy are keeping retailers on edge
Costco Wholesale (COST.O) beat estimates for holiday-quarter sales and profit on Thursday and said it would cut prices if it receives refunds after a U.S. Supreme Court ruling struck down President Donald Trump’s emergency tariffs. Chief Executive Ron Vachris told a post-earnings call it was “not yet clear” if or when companies would receive refunds, while Aptus Capital Advisors’ David Wagner said the stock still trades like a “safe haven” in a volatile backdrop. 1
Why this matters now is the timing. Retailers are trying to hold prices down while trade rules move fast, and any refund windfall would test how far big chains will go to pass savings through — or protect margins.
The refund clock may be starting, but the mechanics look messy. A federal judge ordered the U.S. government to begin paying back Trump’s emergency tariffs that the Supreme Court deemed illegal in late February, with budget analysts estimating $168 billion to $182 billion could be returned to importers. “They have to refund any money that was unlawfully collected,” the judge said, while U.S. Customs and Border Protection was ordered to outline an initial refund plan by Friday. 2
Costco said net sales rose 9.1% to $68.24 billion in its fiscal second quarter ended Feb. 15, while total revenue climbed to $69.60 billion as membership fees increased to $1.36 billion. Net income rose to $2.04 billion, or $4.58 per diluted share, and comparable sales — sales at stores open at least a year — increased 7.4%; excluding gasoline price moves and currency swings, comparable sales rose 6.7%. The company also reported February net sales of $21.69 billion, up 9.5% from a year earlier. 3
A slide deck released with the results showed traffic and online demand did a lot of the work. Comparable traffic rose 3.1% in the quarter while comparable ticket — average spend per visit — rose 4.2%. Digitally-enabled comparable sales jumped 22.6%. Costco said membership income grew 13.6%, with a 89.7% worldwide renewal rate and 82.1 million paid memberships. Gross margin was 11.02%, up 17 basis points, with a basis point equal to one-hundredth of a percentage point. 4
Warehouse clubs live and die on being cheap enough to keep people coming back. Costco’s pricing talk lands at a moment when shoppers are trading down, but still buying in bulk when they can. Walmart, which runs Sam’s Club, and discount-heavy chains such as Target are watching the same customer.
The refund question adds another layer. If a check arrives, Costco can use it to cut shelf prices quickly. If it doesn’t, management still has to deal with vendors repricing inventory in real time as tariff rates shift.
But there is a downside path. If Costco pushes prices down aggressively, gross margin can give back gains, especially if freight, wages or supply costs move the wrong way. And if new tariffs replace the scrapped ones, some of that refund relief could get swallowed up in the next round of import costs.
The Supreme Court ruling that knocked out the tariffs turned on presidential authority. The court said Trump exceeded his powers under the International Emergency Economic Powers Act, a 1977 law meant for national emergencies; tariffs are taxes on imported goods. 5
Trade policy is still moving in Trump’s direction through other channels. U.S. Treasury Secretary Scott Bessent said an increase in a new temporary global import tariff to 15% from 10% was likely to be implemented “sometime this week,” after the administration shifted to other legal authorities for duties. 6
For Costco, the next catalyst may not be another earnings beat. It is the gap between what the courts order, what Customs can actually process, and how quickly the company can translate any refund into lower prices without giving up too much profitability.
