Costco Wholesale’s fiscal fourth-quarter results have sparked fresh expectations of a special dividend after the retailer’s cash and short-term investments ballooned to more than $20.2 billion, a 42.7% increase year over year. The company has a well-known pattern of paying large special dividends when cash accumulates, including a $15 per share payout in late 2023.
Costco also booked a non-recurring earnings benefit of $0.15 per diluted share from tariff refunds under the International Emergency Economic Powers Act. CFO Gary Millerchip said the $184 million refund—composed of roughly $174 million in refunded tariffs and $10 million in interest—is only a little more than one-third of the company’s expected total refunds. Most of that windfall is being reinvested in member pricing rather than kept as profit.
CEO Ron Vachris highlighted that Costco cut prices during the second half of the quarter across produce, meat, beverages, home furnishings, and hardware. The strategy is also showing up in membership trends: members under 40 have increased nearly 60% since the COVID pandemic and now represent more than 25% of the member base. Digital sales rose 19.5% year over year, aided by delivery partnerships with DoorDash and Uber Eats, while renewal rates remain near record highs above 90%.
For the quarter, Costco reported net sales of $93.9 billion, up 11.2% year over year, and net income of $3.0 billion, up from $2.61 billion. Comparable sales excluding gasoline and foreign-exchange effects rose 6.7%. Worldwide membership renewal was 89.8%, with 84.1 million paid members.
The refund-driven price moves mirror Walmart’s plan to use about $2.9 billion in tariff refunds to cut prices across thousands of products, turning accounting windfalls into a competitive price weapon for inflation-sensitive shoppers. The refunds trace back to the Supreme Court’s February decision invalidating broad tariffs imposed under the International Emergency Economic Powers Act. Wall Street analysts rate Costco at Overweight with an average price target near $1,081, implying roughly 20% potential upside from current levels.
