Costco 4Q FY26 First Take: Overall, 4Q results came in slightly above expectations, with a steady profile. More importantly, the company passed through a large portion of the tariff refunds to members, retaining only a small piece as a one-time gain disclosed separately. Management also stated that future refunds will be handled the same way, largely passed through, honoring its pledge not to profit from refunds.

Ex-gas and ex-FX comps remained stable in the 6%-7% range. A positive signal came from traffic, as visit frequency in both global and U.S. markets ticked up for the first time after nearly five quarters of deceleration, albeit aided by higher gas prices driving fuel-station traffic. By region, the U.S. remained the most resilient, while Canada slowed on trade-negotiation sentiment.

On membership, the tailwind from the 2024 fee hike was fully lapped this quarter, driving membership fee revenue growth down to high single digits. However, the paid member renewal rate appears to have bottomed and started to recover, which is encouraging.

The pass-through of tariff refunds via price cuts weighed on GPM, but core merchandise GPM improved ex refunds and price reductions, led by fresh, non-food, and grocery. Store opex ratio was flat ex fuel, suggesting less room for further cost discipline at the margin. Overall margins were flat YoY. $Costco Wholesale(COST.US)