Key Takeaways
- Costco’s digitally enabled sales surpassed $33 billion in fiscal 2026, marking an impressive growth of over 20%.
- Same-day delivery via Uber Eats, DoorDash, and Instacart averages under one hour, suggesting a supplementary enhancement rather than a diversion from warehouse sales.
- Personalized recommendations, tailored emails, and AI-driven search functionalities contributed significantly to robust growth.
Costco Wholesale Corporation has manifested considerable progress in its digital operations, becoming an integral component of its retail framework.
In the fiscal year 2026, the company’s digitally enabled sales, bolstered by third-party delivery mechanisms, surpassed an impressive $33 billion, reflecting a growth rate exceeding 20%.
The fourth quarter exhibited sustained vigor, as comparable sales driven by digital channels grew by 19.5%, or 19.8% when accounting for foreign exchange fluctuations. Furthermore, traffic to its e-commerce platforms and mobile application surged by 30%.
The momentum of this growth is broadly based, transcending any singular category of merchandise. During the quarter, pharmacy, home furnishings, small appliances, hardware, housewares, and domestic goods emerged as the strongest performers in Costco’s digital sales portfolio.
Concurrently, the company is amplifying its same-day delivery offerings through partnerships with Uber Eats, DoorDash, and Instacart.
Notably, management reported that average delivery durations across these services typically remain under one hour, indicating that these transactions mainly serve as incremental sales rather than cannibalizing in-store purchases.
In parallel, Costco is refining the member experience by enhancing product discoverability online. Tailored product placements and targeted email communications yielded remarkable triple-digit sales growth in the fourth quarter, with 10% of orders from Costco.com incorporating personalized items.
Additionally, traffic generated by AI-driven search functionalities increased at a remarkable triple-digit rate for the second consecutive quarter, delivering the highest conversion rates among all traffic sources.
For Costco, the ongoing expansion of its e-commerce capabilities hinges critically on streamlining the digital shopping experience to be swifter, more pertinent, and complementary to warehouse visits.
Comparative Digital Sales Growth at Walmart and Target
Walmart Inc. continues to exhibit robust digital growth, with global e-commerce sales advancing by 23% in the second quarter of fiscal 2027, constituting 24% of total net sales.
U.S. e-commerce operations at Walmart experienced a 24% uptick, driven by enhanced store-fulfilled delivery options and marketplace diversification.
Furthermore, Walmart noted over 40% growth in store-fulfilled deliveries, with rapid delivery services witnessing an impressive 48% increase, underscoring Walmart’s strategic emphasis on speed, diversity of offerings, and fulfillment efficiency to deepen customer engagement.
Target Corporation reported commendable advancements in its digital channels, with comparable digital sales increasing by 8.7% in the second quarter of fiscal 2026, primarily propelled by over 25% growth in same-day delivery services.
To bolster this growth trajectory, Target is focusing on digital personalization, AI-enhanced shopping tools, and an improved app interface.
Furthermore, external traffic driven by AI platforms has surged significantly, now growing more than 3.5 times the industry average, reflective of Target’s adept use of technology to heighten online discovery and customer interaction.
Costco’s Performance Relative to Its Industry
Over the past three months, Costco’s stock has declined by 2.5%, slightly outperforming the industry’s overall downturn of 2.6%.
Current Valuation Insights for Costco
From a valuation perspective, Costco’s forward 12-month price-to-earnings ratio is currently at 40.03, which is above the industry average of 27.15.
Nevertheless, this figure remains below Costco’s median ratio over the past year, which stood at 44.96, suggesting a moderation in its valuation.
Earnings Estimates for Costco
The Zacks Consensus Estimate forecasts that for Costco’s current fiscal year, sales and earnings per share will exhibit year-over-year increases of 8.3% and 11.8%, respectively.
For the upcoming fiscal year, the consensus anticipates a 7.2% rise in sales along with a 9.1% boost in earnings.
Notably, the earnings consensus for the ongoing fiscal year has risen by 36 cents to $22.87 per share, and for the following fiscal year, this estimate has increased by 45 cents to $24.94 per share within the last 30 days.
Currently, Costco holds a Zacks Rank of #3 (Hold). A comprehensive list of today’s Zacks #1 Rank (Strong Buy) stocks can be accessed through the appropriate channel.
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