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Costco makes money on its memberships instead of marking up prices, and shoppers love it when they’re careful about spending.
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It has an edge over other retailers if tariffs raise prices because it has the ability to absorb them without passing them on to shoppers.
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Costco stock has a premium price tag.
The market just can’t get enough of Costco Wholesale (NASDAQ: COST) stock, and economic volatility is only helping. Costco is reliable for strong performance in any environment, and it tends to do very well when there’s a recession.
As tariffs keep the market in turmoil and companies calculate their potential effects into forecasts, Costco continues to churn out spectacular operating results. Is it only going to get better? Let’s see if now is a great time to buy Costco stock.
Costco has a differentiated, if not completely unique, business model that charges annual fees but offers rock-bottom prices. It tends to attract a more affluent crowd that is willing to pay for the privilege of shopping at Costco’s multiple global warehouses, and it keeps them coming in to make the most of their paid memberships. It’s a win-win model that creates consumer loyalty and keeps traffic high, and because Costco makes so much money from the annual fees, it can cap price markups and still generate incredibly high profits.
This works under any conditions, but you often see the greatest results when times are tough and consumers are trying to save money. Instead of shopping at more expensive stores, they’ll spend more on their weekly or monthly Costco runs.
Costco’s most recent operating results demonstrate how well this works. In the 2025 fiscal second quarter (ended Feb. 16), sales increased 9.1% year over year, and comparable sales (comps) were up 8.3%. Earnings per share rose from $3.92 last year to $4.02 this year. Costco is one of few companies that provide monthly updates, and March was another continuation of its positive trends. Sales were up 8.3% and comps were up 7.5%.
E-commerce sales increased 20.9% in the first quarter, and it has become an important growth driver for Costco as it leans into its strengths in digital. For example, it added a tool for users to see if their local warehouse has products they want. It’s also growing its share of big and bulky items, which are a more cost-efficient fit for its logistics network.
Membership metrics were just as telling. U.S. and Canada renewal rates were 93% in the first quarter, and worldwide it was 90.5%. Paid household members increased 6.8% year over year, and executive members, who pay double the standard annual membership fee of $65, increased 9.1%.
