Costco's Supply Chain Strength Could Be Its Secret Weapon Against Tariff Pressures

Costco Wholesale Corp. (NASDAQ:COST) posted steady August sales growth, underscoring resilient consumer demand across food and nonfood categories.

Excluding the impacts from changes in gasoline prices and foreign exchange, consolidated comparable sales increased 6.9% year-over-year in August.

U.S. comparable sales increased by 6.7%, Canada by 9.4%, and international markets by 5.3%, while e-commerce surged by 18.3%.

Also Read: Costco Stock Hits A Death Cross — But Don’t Hit Sell Just Yet

The company’s traffic trends remained healthy in August, with worldwide visits increasing by approximately 4% and U.S. traffic up 4.3%.

This highlights continued strength across food and sundries, fresh categories, and nonfood items, such as jewelry, appliances, and garden products.

Raymond James reaffirmed its Outperform rating ahead of Costco’s fiscal fourth-quarter earnings release on September 25, noting Costco’s scale, supply-chain efficiency, and loyal membership base position it better than peers to manage tariff and inflation risks.

Analysts led by Bobby Griffin lowered their fourth-quarter EPS estimate for Costco to $5.83 from $5.90, citing adjustments to comparable sales, foreign exchange, and fuel prices, along with higher SG&A growth.

They noted SG&A is still trending lower on a per-warehouse basis as the July 2024 wage investment rolls off. The firm kept its fiscal year 2026 EPS forecast largely unchanged at $20.20.

Gasoline price deflation had a modest impact on reported sales, trimming about 60 basis points, while the currency was a slight net positive.

The firm noted Costco’s scale, supply-chain strength, and vendor ties should help it navigate tariff and inflation risks better than peers, while its membership model continues to drive loyalty.

The retailer trades at approximately 52 times forward earnings, which is well above its three-year median multiple of 38.

Raymond James set a price forecast of $1,070 for Costco, based on approximately 49 times its fiscal year 2027 EPS estimate of $21.80.

The brokerage stated that consistent market share gains, durable earnings growth, and long-term global expansion prospects support the premium valuation.

Price Action: COST shares were trading lower by 0.77% to $936.00 at last check Tuesday.

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