COST Stock In Focus: Costco’s Record Fuel Sales Have Wall Street Worried About Inflation Again

• CEO Ron Vachris said Middle East tensions disrupted fuel markets and drove more shoppers to Costco’s cheaper gas stations.
• CFO Gary Millerchip warned that non-food inflation could rise as resin costs work their way through supply chains. 
• Costco’s US comparable sales, excluding gasoline, increased by 6.8%. 

Costco Wholesale (COST) stock is headed towards its worst week in two months despite its fiscal third-quarter (Q3) earnings beat, as investors were overwhelmed by inflation concerns tied to the company’s soaring fuel business. 

The company said higher gas prices and strong fuel demand drove record customer numbers at its gas stations in Q3, as shoppers sought cheaper fuel amid ongoing global tensions and inflation concerns.

CEO Says COST’s New Customers Drawn To Gas Savings

Speaking on the earnings call, CEO Ron Vachris said unrest in the Middle East disrupted fuel markets and drove more consumers to Costco’s lower-cost gasoline offerings.

“The result was record-breaking volumes all 3, 4-week fiscal periods of the quarter set successive all-time company volume sales records with the final 5 weeks of the quarter, becoming our top 5 volume weeks ever,” said Vachris.

Vachris added that elevated fuel prices encouraged many members to visit Costco gas stations for the first time. According to him, shoppers who regularly purchase fuel at Costco locations also tend to spend more inside warehouses, making gasoline operations an important driver of long-term customer loyalty.

This is a telling sign of how rising fuel prices and inflation pressures are reshaping consumer behavior across the United States. The strong fuel traffic meant households looked for ways to manage tighter budgets. 

Costco stock inched 0.06% higher overnight, heading into Friday. 

Inflation Pressures Remain In Focus For COST 

Vachris explained that the company is continuing to watch how higher oil prices and tariffs could affect broader inflation trends in coming quarters. The retailer reiterated plans to return tariff-related funds to customers in some form, though the timing and size of any reimbursement will depend on several factors, including ongoing legal proceedings connected to the refund process.

CFO Gary Millerchip said overall inflation increased modestly during Q3, largely because of higher gasoline prices. He noted that softer pricing in categories such as produce, eggs and dairy partially offset those increases. 

However, Millerchip expected inflation to rise further across some non-food categories as higher resin-related input costs move through supply chains.

While Costco’s Q3 revenue of $69.15 billion slightly missed the Street estimate of $69.2 billion, according to Fiscal AI data, earnings of $4.9 were in line with the estimate. Costco’s US comparable sales, excluding gasoline, increased by 6.8%. 

COST Retail Traders View

On Stocktwits, retail sentiment around the stock improved to ‘extremely bullish’ from ‘bullish’ territory the previous day. 

A user said, “interesting but not a good story! The gas price is driving its membership up!.”

Another user said, “may sales numbers will be released next week on Wednesday…expect another blockbuster sales report due to memorial day long weekend.”

COST stock has gained over 15% year-to-date. 

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