Happy Sunday. Here’s your retail week in review.
The Big Story: Costco Closes Fiscal 2026 with a Beat, and Digital Keeps Climbing
Costco capped its fiscal year with fourth quarter results that topped expectations on both lines. The company reported net income of $2.998 billion, or $6.75 per diluted share, for the 16-week fourth quarter, up from $2.610 billion, or $5.87 per share, a year earlier, beating the $6.48 to $6.55 consensus range analysts had modeled. Revenue reached $95.7 billion against an estimate of roughly $94.85 billion.
Two numbers matter more than the headline beat. First, comparable sales growth came in at 9.4% year over year, or 6.7% adjusted for gas and FX, with management noting the later timing of Labor Day contributed to some August softness. Second, and this is the one I’d flag for anyone in retail tech or supply chain, digitally enabled comparable sales rose 20.9% for the full fiscal year and 19.5% in the quarter, with adjusted increases of 20.7% and 19.8% respectively. Costco isn’t a digital-first retailer by any stretch, so growth at that clip inside a warehouse club model says something about how deeply omnichannel fulfillment has embedded itself even in categories built around bulk, in-person shopping. That’s reinforced by the delivery expansion moves both Costco and its rivals made this month: Costco expanded its Uber Eats delivery partnership to 47 states, on top of a nationwide DoorDash rollout that landed just before this earnings report.
Worth noting for anyone tracking margin quality: $184 million of that quarterly net income came from IEEPA tariff refunds, a detail that ties directly into the week’s second big theme.
Tariffs Are Quietly Becoming an Earnings Line Item
Costco wasn’t the only retailer whose results got a tariff-refund lift this week. AutoZone’s Q4 print showed the same pattern, with tariff refunds boosting gross margin by 145 basis points even as sales came in slightly below estimates. That’s a shift worth sitting with: tariff policy has moved from a cost-side risk retailers hedge against to something that’s now directly, and unpredictably, showing up as a reported earnings benefit.
The underlying trade picture stayed unsettled all week. A Senate-passed sanctions bill that would hand the administration power to impose tariffs up to 100% on countries including India, China, and Turkey headed to the House floor, and Canada’s retaliatory tariffs, up to 50% on roughly $27.6 billion of US goods spanning steel, dairy, appliances, and electronics, remained in effect in response to US Section 338 duties on Canadian imports. For anyone building sourcing or pricing models right now, the honest read is that the ground is still moving, and refund timing has become almost as important a planning variable as the tariffs themselves.
Earnings Season Is Just Getting Started
Retail’s Q3 earnings picture is turning out to be a story of haves and have-nots. LSEG’s retail scorecard shows five of ten consumer-related sectors have turned negative, with Leisure Products heading for 31.6% earnings growth while Household Durables faces an expected 7.1% decline. Nike reports next week, and the setup is rough: analysts expect earnings to decline 10.6% and revenue to fall 3.3%, as the company navigates softer demand and a more promotional environment. Toy retailers are heading into their own reports with a similarly mixed setup, with demand concentrated in collectibles and trading cards while freight and input costs, along with order shifts from Q3 into Q4, weigh on the broader category.
What Might Be Slipping Through the Cracks
Two things deserve more attention than they’re getting:
Restaurant distress is bleeding into retail’s broader read on consumer health. A Wendy’s franchisee filed for Chapter 11 bankruptcy protection this week, a smaller headline next to Costco’s blowout quarter, but it’s a data point in the same story: value-conscious consumers are propping up warehouse clubs and discounters while squeezing operators further down the food chain.
Order-shift dynamics are becoming a real supply chain signal. Toy retailers pulling orders forward from Q4 into Q3 (or the reverse, depending on the company) isn’t just a merchandising decision anymore, it’s a hedge against tariff timing and freight cost volatility. That’s the kind of operational detail that doesn’t make headline roundups but matters enormously to anyone running inventory, RFID-enabled tracking, or fulfillment systems right now.
The Takeaway
Three forces are shaping retail this week: a resilient but bifurcated consumer (strong at Costco, weak at Wendy’s franchisees and household durables), tariff refunds that are now material enough to move reported earnings, and continued proof that digital and delivery infrastructure investment is paying off even for retailers, like Costco, that built their model on the opposite premise. If there’s one thing to watch into next week, it’s Nike’s report on Tuesday. A soft print there would confirm that the promotional pressure hitting apparel and footwear is broader than just one brand’s execution problem.