Costco sees sales jump 11% and more customers eyeing ‘lower cost protein’

Costco‘s latest quarterly earnings report, released late Thursday, showed a jump in sales from a year earlier as the company describes consumers looking to stretch their dollars as far as they can.

This comes as the heightened cost of living in Canada forces many households to cut back on some non-essential items and experiences, with a report released earlier this week showing even higher-income Canadians are dining out less than a year ago.

In the three months leading up to the end of August, Costco says net sales increased 11.2 percent to US$93.9 billion from $84.4 billion last year.

Meanwhile, membership fees totalled $1.85 billion, up about seven per cent from $1.724 billion in the same quarter of 2025. Costco’s membership fees have not changed since an increase in 2024.

Speaking during a conference call with analysts after the earnings release, chief financial officer Gary Millerchip said that Costco has 84.1 million paid members in total, up 3.8 per cent from a year earlier.

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Costco said it believes its focus on value offerings is driving consumers to them for more of their shopping because they want to make sure that if they have to spend their money, they are getting the most they can in return.

Consumers are also grappling with high prices for many everyday items, including groceries, as consumer inflation in Canada and the U.S. was last measured in August at three per cent and 3.4 per cent, respectively.

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The war in Iran and AI spending are putting pressure on prices for oil, gas, and related by products and well as electronics and components like memory chips. This, Costco said, has led to higher prices in some categories.

“Just to unpack inflation for you […] the area where we did see some increase in the current quarter was in non-foods. That was really, I wouldn’t say it was isolated, but the vast majority of it was in memory costs on consumer electronics and the items that you would expect to be related to oil,” said Millerchip.

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“So gas prices, which we include in our inflation number, and petroleum-based items as well, So those would be the areas where we would’ve seen the increase in non-foods.”

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Despite some areas where prices have increased, Costco said its members are still willing to open their wallets if they feel they are getting good value.

“We see members being very thoughtful about where they’re spending their dollars,” said Millerchip.

“They’re looking for value in everyday items. But they’re also, as I mentioned, willing to spend on items where they see it’s a great value, even if it is in some of those non-discretionary categories.”

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Millerchip continued and said there was more-than 50 per cent growth in sales of “non-foods,” and included examples ranging from tires to houseware and furniture, to health and beauty items, small appliances, and even massage chairs and saunas.

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He also said that within the food section, there has been steady sales growth in “lower-cost proteins” as consumers look to fill the fridge while saving money.

At the same time, Millerchip said another example of consumers being willing to spend more if there is greater perceived value was more demand for premium or “indulgent” food products.

“Similarly, I would say in fresh, everyday items, it really shows up in ground beef and poultry, but then on premium items in USDA Prime and Wagyu beef,” he said.

“Also in bakery, we see tremendous strength in bakery, where we are offering really great quality, indulgent items for members to buy. I think it shows up in all the different categories.”