NEW YORK, March 5, 2026, 19:11 EST
- Costco beat Wall Street’s quarterly sales and profit estimates, with the retailer adding that prices could come down if tariff refunds come through.
- CEO Ron Vachris said it’s still not clear when refunds might go out.
- Refund disputes in U.S. courts and ongoing changes in tariff rules have retailers watching closely.
Costco Wholesale (COST.O) topped Wall Street expectations for both sales and profit in the holiday quarter on Thursday, and signaled it’s ready to lower prices if it ends up receiving tariff refunds after the U.S. Supreme Court tossed out President Donald Trump’s emergency tariffs. “Not yet clear” if or when those refunds will materialize, CEO Ron Vachris cautioned on the post-earnings call. Still, David Wagner at Aptus Capital Advisors said the stock’s behaving like a “safe haven” against the current backdrop. Reuters
The timing is the story here. Retailers scramble to keep prices steady just as trade policy shifts accelerate. If a refund windfall lands, it’ll put major chains on the spot: will they hand the savings to shoppers, or guard their own margins?
The refund process is kicking off, but it won’t be straightforward. A federal judge has directed the U.S. government to start repaying Trump-era emergency tariffs after the Supreme Court tossed them in late February. Budget analysts say importers could see $168 billion to $182 billion coming back their way. “They have to refund any money that was unlawfully collected,” the judge said. U.S. Customs and Border Protection now has until Friday to deliver its first refund plan. Reuters
Costco’s net sales jumped 9.1% to $68.24 billion for the fiscal second quarter ended Feb. 15, with total revenue touching $69.60 billion as membership fees reached $1.36 billion. Net income came in higher at $2.04 billion, or $4.58 per diluted share. Comparable sales, tracking stores open at least a year, climbed 7.4%. Strip out fuel and currency moves, and that figure lands at 6.7%. February net sales posted at $21.69 billion, marking a 9.5% gain from the same period last year.
Costco’s results came with a slide deck showing traffic and digital demand doing the heavy lifting. Comparable traffic climbed 3.1% for the quarter, while the average ticket — the amount spent per trip — was up 4.2%. Digitally-enabled comparable sales soared 22.6%. Membership-related income increased 13.6%, with a global renewal rate of 89.7% and 82.1 million paid memberships on the books. Gross margin landed at 11.02%, a 17 basis point improvement. One basis point equals one-hundredth of a percent.
Warehouse clubs have to stay cheap or lose their edge. Costco’s latest on pricing comes as shoppers look for bargains, yet keep loading up when possible. Walmart’s Sam’s Club and discount-focused rivals like Target are eyeing those same buyers.
The refund question complicates things further. Should a check show up, Costco can move fast to drop shelf prices. No check? Management faces the scramble—vendors are adjusting inventory prices on the fly as tariff rates keep changing.
Still, there’s risk. Should Costco decide to slash prices too hard, those gross margin improvements could evaporate—particularly if freight, wage, or supply costs start rising again. And if new tariffs get introduced after the old ones are dropped, the expected refund relief might just disappear into fresh import expenses.
Presidential authority was at the heart of the Supreme Court decision that scrapped the tariffs. According to the justices, Trump overstepped the limits set by the International Emergency Economic Powers Act—a 1977 statute designed for national emergencies. Tariffs, after all, are just taxes on imports.
Trade policy continues to edge toward Trump’s stance by different means. U.S. Treasury Secretary Scott Bessent indicated that a hike in the temporary global import tariff—to 15% from 10%—is expected “sometime this week,” following the administration’s pivot to alternative legal avenues for imposing duties. Reuters
Costco’s next move isn’t just about topping earnings forecasts. The key issue lies in the space between court rulings, Customs’ ability to process changes, and how fast the retailer can turn any refund into price cuts that don’t eat too deeply into margins.
