Costco's September sales are strong. The profit test is still ahead
By @engtmk · Research as of 9 October 2026
Monday’s retail research asked whether growing orders would become durable profit as costs rise. Costco now supplies fresh company evidence: sales are holding up across its reported geographic groups. The missing piece is what those sales earn.
September strengthens the demand side of the Costco thesis. It does not establish September margins, earnings growth or an attractive entry valuation. That distinction is the central question in today’s published eToro post.
The useful investor response is to raise confidence in the sales evidence while keeping the profit and price tests open. A good business update can reduce one uncertainty without resolving the others.
What the release actually measures
Costco’s 7 October September sales release covers the five weeks ended 4 October 2026, rather than the calendar month. Net sales were $30.02 billion, up 13.0% year over year.
| September measure | Year-over-year growth |
|---|---|
| Total comparable sales, reported | 11.4% |
| Total comparable sales, excluding gasoline-price and FX changes | 7.6% |
| Digitally-enabled sales, reported | 19.0% |
| Digitally-enabled sales, excluding FX | 19.1% |
The total comparable-sales gap is 3.8 percentage points, calculated as 11.4 minus 7.6. It combines gasoline-price and currency effects; the release does not isolate their individual contributions. The adjusted measure still includes other price changes and is not unit growth.
Later Labor Day boosted total and comparable sales by just over 0.5 percentage point. That timing effect remains in the 7.6% measure. Digitally-enabled sales include transactions initiated digitally and fulfilled through warehouses, distribution centres or Costco Travel; they are broader than online deliveries. The update reports no September margins or earnings.
These distinctions prevent a misleading chain of inference: adjusted sales growth is not automatically volume growth, volume growth would not automatically mean margin expansion, and margin expansion would not automatically make the stock a good purchase at any price.
Breadth improves the sales case
The same September release gives the geographic comparison below. Gaps are author calculations in percentage points, not estimates of profit effects.
| Geographic group | Reported comps | Excluding gasoline-price and FX changes | Combined gap |
|---|---|---|---|
| U.S. | 12.5% | 8.0% | 4.5 |
| Canada | 6.3% | 4.9% | 1.4 |
| Other International | 10.8% | 7.7% | 3.1 |
All three groups remain positive on the adjusted basis. That is more persuasive evidence of breadth than a headline supported by one group while others contract. Canada is slower, however, and the aggregate does not establish equal strength in every country or merchandise category. No geographic profit bridge or category-level September sales table is supplied here.
The geography also matters for interpretation. Applying a national U.S. services-cost survey mechanically to Costco’s entire business would overlook a multinational sales base and company-specific purchasing choices. Monday’s cost-pressure framework remains useful, but this release cannot quantify how that backdrop affected Costco’s expenses.
Nor should 13.0% net-sales growth minus 11.4% comparable growth be labelled a precise contribution from new warehouses. Total sales and comparable-sales growth use different bases. A reliable expansion bridge would need the company’s definitions and contribution disclosures.
August is the monthly comparison; Q4 is a separate baseline
The 2 September August sales release covers four weeks ended 30 August. It reported total comparable growth of 8.4%, or 5.4% excluding gasoline-price and FX changes. The combined gap was 3.0 percentage points. Labor Day timing reduced August total and comparable sales by a little less than 0.75 percentage point.
September’s adjusted growth rate is therefore 2.2 percentage points above August’s, but that is a comparison of two year-over-year rates. It is not 2.2% sequential sales growth. The holiday shifted in opposite directions in the two reports, so some of the apparent improvement reflects the calendar. The approximate timing disclosures do not justify an exact holiday-neutral acceleration estimate.
The dollar totals also cover different numbers of weeks. Comparing September’s $30.02 billion directly with August’s $23.70 billion as evidence of month-on-month demand acceleration would be misleading. Simply dividing by weeks would still leave seasonality and holiday placement unresolved.
The 24 September Q4 earnings release covers 16 weeks ended 30 August. Q4 adjusted comparable growth was 6.7%, compared with September’s 7.6%. This is a quarter versus a retail month, not two consecutive months. August is already inside Q4, so the three observations should not be counted as three independent periods confirming a trend.
Taken together, the evidence is consistent with resilient sales after the fiscal year-end. A single retail month, partly aided by timing, is insufficient to declare a new structural growth rate.
Digital growth is encouraging, but its economics remain open
The digital figure deserves attention because it measures customer activity through another entry point. It does not identify how much growth comes from additional customer spending rather than transactions moving from one initiation method to another.
Digital initiation and physical fulfilment can overlap. Adding digitally-enabled growth to warehouse growth would therefore invent a total that the release does not report. The update also does not supply digital sales dollars, sales share, fulfilment costs or channel profit margins. Faster digital growth cannot be converted into an earnings contribution from these percentages alone.
A favourable interpretation is that convenient digital tools support member engagement and more shopping. The counterargument is that servicing that activity may require spending that offsets some of the benefit. Both are hypotheses. The relevant proof is incremental profitable demand, supported by disclosed customer and cost evidence, rather than the growth rate of a channel label alone.
The earnings baseline needs its own adjustment
Q4 offers actual profit evidence for an earlier period: $3.801 billion of operating income versus $3.341 billion, and $1.850 billion of membership fees versus $1.724 billion. Author calculations put those growth rates at approximately 13.8% and 7.3%, respectively.
Using total revenue including membership fees as the denominator, reported Q4 operating margin was approximately 3.97% versus 3.88%: operating income divided by $95.723 billion and $86.156 billion. The roughly 0.09-percentage-point improvement is reported, not a clean recurring-margin forecast. The release identifies a $0.15 per diluted share non-recurring net benefit from tariff refunds after partial reinvestment in member value. That EPS disclosure alone is insufficient to calculate an adjusted operating margin.
The 25 September Costco analysis examined why removing the disclosed earnings benefit does not recreate a business quarter in which the refund never existed. September’s sales update provides no new profit adjustment and cannot validate the sustainability of Q4 margins.
Membership income remains part of the economic model, but fee growth alone does not settle renewal quality or merchandise profitability. At the next earnings report, member counts, renewals where disclosed, fee income and customer value should be assessed alongside merchandise costs and operating expenses. Strong shopping activity is most useful when it supports durable total economics.
Why sales alone cannot determine the equity outcome
Consider a hypothetical retailer, not Costco guidance: sales start at 100 and operating margin at 4%, producing operating profit of 4. If sales grow 8% to 108 while margin falls to 3.7%, profit is 3.996—approximately flat. Holding margin at 4% would instead produce profit of 4.32, up 8%.
This illustration excludes membership fees as a separate stream, interest, tax and share-count changes. It deliberately does not apply September’s comparable-sales growth to Costco’s total revenue. Its purpose is to show how modest margin changes can absorb healthy revenue growth.
Wednesday’s earnings-and-multiples research added the price paid for profit to the framework. The same mechanism applies here: stronger earnings can coexist with disappointing share returns if expectations were higher or the valuation multiple falls. This article supplies no current COST price, consensus forecast or comparable valuation series, so it makes no claim that the stock is cheap, expensive or mispriced today.
Three outcomes worth testing
| Analytical scenario | Evidence that would support it | Evidence that would challenge it |
|---|---|---|
| Sales resilience becomes durable profit | Continued broad adjusted sales growth, stable membership economics and recurring operating-profit growth with controlled expenses | Higher sales accompanied by persistent margin deterioration or worsening customer retention |
| Costs consume the growth | Merchandise or expense pressure offsets revenue growth; cash conversion weakens | Cost discipline and productivity preserve profit without heavier promotions |
| September overstates the lasting demand improvement | Sales growth moderates as favourable timing fades, with weakness in shopping activity where disclosed | Growth remains broad across later periods and is supported by customer activity rather than timing alone |
These are tests, not probabilities or management guidance. The strongest counterargument to a cautious reading is that broad positive adjusted sales are real evidence of resilience: cost pressure may be manageable through scale, buying discipline and productivity. The strongest counterargument to an optimistic reading is that the update omits the expenses needed to earn those sales. Neither argument warrants dismissing the other.
What to watch next
4 November: October sales, scheduled on Costco’s official event page, are the next monthly check. Examine adjusted growth, geographic breadth and any disclosed timing effects before claiming persistence. For digital activity, look for definitions and additional detail rather than assuming that faster growth means a more profitable mix.
The next quarterly results are the profit check: compare recurring merchandise economics, operating expenses, membership income and cash generation with the corresponding prior-year fiscal period. Keep any exceptional benefits separate and explain their operating effects rather than stripping them out mechanically.
Check Costco’s official events calendar for the current release schedule. The monthly sales update and quarterly earnings answer different questions; a positive first check should not be treated as a substitute for the second.
My assessment: September improves the evidence for sales resilience. Stronger conviction about earnings still needs the cost and membership evidence; stronger conviction about the investment still needs the valuation. Higher costs could squeeze profit, but this release does not show that a squeeze has already happened.
What matters more next: sustained sales growth or stronger margins?
Sources and freshness
Research checked 9 October 2026. Primary evidence is Costco’s linked September sales, August sales and Q4 earnings releases. Publication dates and fiscal reference periods are stated separately. September is the newest company sales evidence used; Q4 supplies an earlier earnings baseline. Earlier site articles provide continuity, not independent verification of today’s facts.
Percentage-point gaps, growth calculations and the reported operating-margin calculation are author arithmetic. Interpretation and scenarios are analysis; the retailer example is hypothetical. No current holding, weight, performance figure, trade or private portfolio opinion is asserted.
My portfolio and views, not investment advice. This article is for research and education.