Costco’s Comeback: Is the Warehouse Giant Back on Top?
After a sluggish 2025, Costco is signaling a strong resurgence. A recent surge in December sales – up 6.3% in U.S. comparable sales – has ignited investor confidence and prompted analysts to reassess their outlook. This isn’t just a blip; it suggests Costco is addressing concerns about valuation, membership renewals, and shifting consumer habits.
The December Sales Surge: What’s Driving the Momentum?
The December numbers were particularly impressive, exceeding estimates of 3.5% and accelerating from November’s 5.8% gain. Several factors appear to be at play. Strong performance in fresh foods (high single-digit growth) and non-food categories (mid-single-digit growth) indicate broad-based demand. Crucially, the average transaction size increased by 4.2%, suggesting customers are loading up their carts.
This contrasts with the broader retail landscape, where consumers have been more price-sensitive. Costco’s membership model, with its loyal base and high renewal rates (over 90%), provides a buffer against economic headwinds. It’s a testament to the perceived value offered – bulk purchases at competitive prices.
Walmart’s Reign Challenged: Can Costco Overtake the Retail King?
While Walmart enjoyed a stellar 2025, with shares gaining over 23%, Costco is poised to close the gap. Jim Cramer, a prominent financial commentator, believes Costco’s underperformance relative to Walmart won’t continue. The narrative is shifting from concerns about Costco’s valuation to excitement about its potential for further growth.
However, Walmart remains a formidable competitor. Its extensive supply chain, diverse product offerings, and growing e-commerce presence present a significant challenge. The battle for retail dominance will likely continue throughout 2026 and beyond.
E-Commerce: The Area for Improvement
Despite the overall positive trend, Costco’s e-commerce growth lags behind its in-store performance. December saw a 18.9% increase in digital comparable sales, a step up from November’s 16.6%, but significantly lower than the 34.4% growth experienced in the prior year.
This highlights a crucial area for improvement. While Costco’s membership model provides a strong foundation, expanding its online offerings and enhancing the digital shopping experience are essential for capturing a larger share of the rapidly growing e-commerce market. Investing in faster delivery options and a more user-friendly website could be key.
Did you know? Amazon continues to dominate the e-commerce space, but warehouse clubs like Costco are increasingly leveraging their loyal customer base to build online sales.
Analyst Outlook and Future Projections
Analysts at D.A. Davidson have increased their core U.S. comps estimate for fiscal Q2 to 5.5% from 5.1%, and total comp estimates to 6.9% from 6.7%, based on the strong December data. They maintain a $1,050 price target and a “hold-equivalent” rating on the stock.
Upcoming investor meetings (January 15) and January sales data (February 4) will provide further insights into Costco’s performance and future trajectory. Investors will be closely watching for continued momentum in comparable sales, improvements in e-commerce growth, and any updates on membership renewal rates.
The Broader Implications for the Retail Sector
Costco’s resurgence has broader implications for the retail sector. It demonstrates the enduring appeal of the warehouse club model, particularly in times of economic uncertainty. Consumers are seeking value and convenience, and Costco delivers on both fronts.
This trend could put pressure on traditional retailers to offer more competitive pricing and enhance the customer experience. The retail landscape is constantly evolving, and companies that can adapt to changing consumer preferences will be best positioned for success.
FAQ
Q: What is driving Costco’s recent sales growth?
A: Strong performance in fresh foods, non-food categories, and an increase in average transaction size are all contributing to the growth.
Q: Is Costco’s e-commerce business growing fast enough?
A: While e-commerce sales are increasing, they are growing at a slower rate than in the previous year, representing an area for potential improvement.
Q: What is Jim Cramer’s outlook on Costco stock?
A: Jim Cramer believes the tide is turning for Costco and that its underperformance versus Walmart is unlikely to continue.
Q: What is Costco’s membership renewal rate?
A: Costco boasts exceptionally high membership renewal rates, exceeding 90%, demonstrating strong customer loyalty.
Want to stay up-to-date on the latest retail trends? Subscribe to our newsletter for exclusive insights and analysis.
