At a Glance

  • Costco Wholesale CFO Gary Millerchip said on Thursday's earnings call that the company's popular $1.50 hot dog and soda combo remains one of its key offerings. He noted that the company's investments in production facilities—including expanding hot dog capacity and building a new coffee roasting facility—are among the reasons for the rise in capital expenditures.
  • The Issaquah, Washington-based company's capital expenditures for fiscal 2025, which ended August 31, increased to "just under" $5.5 billion. Millerchip said on the call (according to the transcript) that Costco made additional investments to support growth, including plans to open 35 new stores in fiscal 2026, accelerate the pace of store remodels, and purchase land for future expansion. That figure is higher than the $4.7 billion for fiscal 2024 disclosed in the company's 10-K filing.
  • "While members love the treasure-hunt items they find in warehouses and online, our everyday value items are also extremely important to them, especially during times of economic uncertainty," Millerchip said. He also mentioned that the company recently celebrated the 40th anniversary of the hot dog combo. "There's no better example than our hot dog combo, rotisserie chicken, and Kirkland Signature toilet paper. In fiscal 2025, we sold over 245 million hot dog combos, over 157 million rotisserie chickens, and enough toilet paper to go to the moon and back more than 200 times."

In-Depth Analysis

Costco continues to seek investment growth while navigating tariff impacts, inflation, and potential changes in consumer spending. The company reported fourth-quarter net sales rose 8% year over year, increasing to $84.4 billion from $78.2 billion in the same period last year. Looking ahead, Millerchip said the company's capital expenditures could rise again year over year, but he declined to provide a specific figure.

"We expect capital expenditures in 2026 to be higher than in 2025, and they could again be slightly higher than sales, for the same reasons as in 2025," Millerchip said on the call. Costco is not the only company planning to increase investment. As CFO Dive previously reported, the Business Roundtable said CEO confidence was boosted this month by increased capital investment plans and expectations for sales growth over the next six months.

When answering analysts' questions about the tariff outlook on Thursday, Millerchip described some of the measures the company has taken and said the company is satisfied with its approach, although he acknowledged that tariffs could still change in the future.

"Based on what we know so far, we feel there hasn't been a cliff-edge impact," Millerchip said. "The impact has been managed gradually by our teams through the various measures we've mentioned, and we basically believe we have completed the risk mitigation strategies currently needed."

Costco's tariff mitigation strategies include: purchasing sporting goods and summer-related items in advance before tariffs took effect, shifting sourcing away from countries with "greater tariff exposure," and sourcing more Kirkland Signature private-label products in the country or region where they are sold. Executives revealed these measures in May.

JPMorgan analysts noted in their comments on Costco's earnings Thursday that the decline in the company's renewal rate is "nothing to worry about," and investors' concerns that extended store hours could impact margins are also "under control." The report said Costco's "middle-to-high-income consumers in the U.S.... make it a major beneficiary of the potential tax relief dividend from the One Big Beautiful Bill Act this spring."