Costco sets records during Q1 and beyond

When the CEO opens an earnings call by discussing a record-setting quarter, it gets the audience’s attention. 

Costco CEO Ron Vachris did just that at the start of the warehouse retailer’s first-quarter review on Thursday afternoon, as he highlighted several significant achievements. 

Costco’s bakery division set a record by selling 4.2 million pies three days before Thanksgiving. In the U.S., the club’s food court sold 274,000 pizzas on Halloween, another high mark. Additionally, the U.S. pharmacy business achieved prescription growth exceeding 19% for the first quarter, setting volume records. Costco Logistics also completed nearly 1 million deliveries during the quarter ended Nov. 24, marking a fourth milestone.

The records kept coming after the quarter ended. On the day before Thanksgiving, Costco opened its 897th warehouse in Pleasanton, Calif., achieving the highest-ever opening day for a U.S. warehouse, with sales of $2.9 million.

Although the rest of the first-quarter results did not set records, they were still strong.

Net sales increased 7.5% year over year, reaching $60.99 billion, and comparable sales in the U.S. were 7.2% higher than in Q1 2024, excluding the effects of gas prices and foreign exchange.

Breaking down the store sales further, fresh foods led the way, with comparable sales in the high single digits, while meat saw double-digit growth.

“We have members who are continuing to purchase high-ticket premium cut selections, while others are gravitating more toward lower-cost per-pound options,” Millerchip said during the call.

Food and sundries had comparable sales increasing in the mid-single digits year over year, with the cooler and frozen departments leading the way.

Costco continues to see strong momentum with new international food items, like pork soup dumplings, rice, and beef sliced rolls. Kirkland Signature, Costco’s private-label brand, is growing faster than the business, up almost 33%.

“I think, in terms of overall trends in food and grocery, we are seeing a shift from food away from home to food at home,” Millerchip said. “That’s certainly reflected in strong meat and produce sales in our business.”

Pharmacy had the strongest sales growth, according to Millerchip. There, Costco introduced new prescription inventory management software to improve stock management and enable prescription deliveries via Instacart.

The average transaction ticket increased by 2.3% in the U.S., excluding gas prices and foreign exchange.

Inflation was essentially flat for core merchandise, but food and sundries, as well as fresh foods, saw slight price increases. 

Net income rose to $1.8 billion, compared to $1.6 billion a year ago, and membership fees brought in $1.166 billion, an increase of $84 million (7.8%) year over year.

Costco CFO Gary Millerchip mentioned during the earnings call that the recent membership fee increase had little impact on the results because of deferred accounting and represented less than 1% of the fee growth for the quarter. Renewal rates for the U.S. and Canada were 92.8%, down 0.1% from last year, but digital sign-ups are on the rise.

E-commerce traffic, conversion rates, and average order value all increased year over year.

Costco also completed its first targeted media campaign through third-party channels during the first quarter of 2025. Millerchip stated the campaign achieved two to three times the return of typical ad-spending programs.

“Our retail media team is now working with over 25 suppliers eager to participate in our next wave of offsite campaigns,” Millerchip said. “We’re seeing strong interest in retail media from marketing agencies, which gives us confidence this is an opportunity to tap into new marketing dollars.”

With the election of President Donald Trump, many retailers are considering how his proposed tariff policies will affect business. Costco believes its merchants and suppliers are well-equipped to navigate the situation. The warehouse retailer will collaborate with vendors to explore cost-mitigation strategies and will consider alternative sourcing locations. Costco will also evaluate individual SKUs to pivot to alternatives if the value proposition isn’t there for members.

Costco also plans to continue to invest in tech.

“We know we are on a technology journey,” Millerchip said. “We’ve been building the foundation for that journey over the past few years, and our goal is to continue improving and enhancing the member experience.”

Costco opened seven new warehouses worldwide during the first quarter and is projecting 29 openings in 2025.