An analyst's summary of Costco's (NASDAQ: COST) fiscal Q2 2026 earnings call states: "On the call, management said it would FULLY OFFSET the impact of tariffs so that member prices would not be affected, and it reported a U.S./Canada membership renewal rate of 93.5%." Verify this summary against what was actually said on that earnings call. For each of the two claims, state whether it is accurate, and if not, give the correct statement or figure.

No filings found for COST.

# COSTCO WHOLESALE CORP /NEW (COST) — SEC Filings

**23 filings** found

## 8-K — Q2 FY2026 (filed 2026-03-05)
Accession: 0000909832-26-000025 | 10 sections | 0 tables

## 8-K (filed 2026-01-21)
Accession: 0000909832-26-000016 | 4 sections | 0 tables

## 8-K — Q1 FY2026 (filed 2025-12-11)
Accession: 0000909832-25-000164 | 9 sections | 0 tables

## 8-K (filed 2025-10-20)
Accession: 0000909832-25-000107 | 2 sections | 0 tables

## 8-K (filed 2025-10-15)
Accession: 0000909832-25-000105 | 3 sections | 0 tables

## 8-K — FY2025 (filed 2025-09-25)
Accession: 0000909832-25-000093 | 7 sections | 0 tables

## 8-K (filed 2025-08-07)
Accession: 0000909832-25-000064 | 1 sections | 0 tables

## 8-K (filed 2025-07-16)
Accession: 0000909832-25-000061 | 3 sections | 0 tables

## 8-K (filed 2025-06-11)
Accession: 0000909832-25-000036 | 1 sections | 0 tables

## 8-K — Q2 FY2025 (filed 2025-05-29)
Accession: 0000909832-25-000031 | 7 sections | 0 tables

## 8-K (filed 2025-04-16)
Accession: 0000909832-25-000023 | 3 sections | 0 tables

## 8-K — Q2 FY2025 (filed 2025-03-06)
Accession: 0000909832-25-000012 | 7 sections | 0 tables

## 8-K (filed 2025-02-03)
Accession: 0000909832-25-000008 | 1 sections | 0 tables

## 8-K (filed 2025-01-27)
Accession: 0000909832-25-000005 | 4 sections | 0 tables

## 8-K — Q1 FY2025 (filed 2024-12-12)
Accession: 0000909832-24-000075 | 7 sections | 0 tables

## 8-K (filed 2024-11-07)
Accession: 0000909832-24-000054 | 2 sections | 0 tables

## 8-K (filed 2024-10-17)
Accession: 0000909832-24-000052 | 3 sections | 0 tables

## 8-K — FY2024 (filed 2024-09-26)
Accession: 0000909832-24-000043 | 7 sections | 0 tables

## 8-K (filed 2024-09-20)
Accession: 0000909832-24-000039 | 3 sections | 0 tables

## 8-K (filed 2024-07-10)
Accession: 0000909832-24-000036 | 3 sections | 0 tables

## 8-K — Q2 FY2024 (filed 2024-05-30)
Accession: 0000909832-24-000026 | 7 sections | 0 tables

## 8-K (filed 2024-04-10)
Accession: 0000909832-24-000020 | 3 sections | 0 tables

## 8-K — Q2 FY2024 (filed 2024-03-07)
Accession: 0000909832-24-000012 | 7 sections | 0 tables

**Tip:** Use `get_filing_section` with a section_id and accession_number above to read section content.

# COST — transcript_qa_session
8-K Q2 FY2026 (filed 2026-03-05)
**Keyword search:** "tariff membership renewal rate" — 1 matching chunk

**[Chunk 2 of 3]**
Yes. Thanks, Ed. I will take a step back overall on gross margin. We were pleased with the quarter overall in gross margin. As you heard us say, the overall result—if you adjust for gas deflation—was up 11 basis points, but we had a gain from a nonrecurring legal settlement in there for six basis points. So overall, we look at it as being up by five basis points in the quarter, and being able to achieve that growth when we were also lowering prices for members and managing the impact of tariffs, I think the team did a really good job of being able to stay the course in making sure we are delivering more value while also being able to deliver a good financial outcome for our shareholders. On the core-on-core specifically, as you heard us say, we were up 22 basis points. I would not say there is one particular sort of driver of that. It is similar to the themes we shared the last couple of quarters. I think during Q2 in particular, partly we would have had some benefit when you look at—we have shared in prior discussions that when we see prices coming down, as we saw in some of the deflationary items, often that is a time that is helpful to us because we can lead the world down with lower prices for our members, but because we turn the inventory so quickly, we also tend to get some financial benefit there. And then we are continuing to work on supply chain efficiencies, and Kirkland Signature penetration continues to improve. So a number of different factors helped with that. At the same time, as you heard us say, there were some offsets in core because we paid higher 2% rewards, we were lapping some higher income in the credit card program, and there is some mix shift as well because our pharmacy business and our ecommerce business are both growing at a faster pace than our core sales. So they kind of dilute some of the impact when you look at the total core margin growth. I share all that context because I think our perspective, when you think about looking forward, is the rate is going to fluctuate and the different elements are going to fluctuate quarter to quarter, and we tend to not get too fixated on one individual element of the margin. Our goal is to run the business holistically for the long term. My comment earlier about some slight improvement in the gross margin rate while lowering prices and continuing to manage the business effectively is how we tend to think about delivering value for, first of all, our members and, in turn, that resulting in value for shareholders. So when you look at the trajectory, I would focus less on one individual metric. Where I would come back to is: look at the quarter overall; we were up about six basis points. If you look at the last twelve to twenty-four months, generally, gross margin has been stable and has grown slightly, and there have been puts and takes with core-on-core and the other elements that I mentioned. But our focus is really on running the business for the long term and making sure we are delivering value for members. We do think through some of the efficiencies that we create we are slightly expanding margin, but it is only slightly because, as Ron mentioned, when we see meaningful benefit, we are reinvesting in the member to make sure that we are driving top-line sales.

_Topic: gross margins_

---

**Rupesh Parikh** (Oppenheimer)

Yeah. Thanks, Rupesh. Yeah. So maybe, again, just taking a step back big picture, we were pleased with the membership results for the quarter. We saw—I think you heard us say in the prepared remarks—7.5% growth in membership fee income if you adjust out the fee increase and FX. So underlying, it is really strong member loyalty and member fee income growth during the quarter. The bigger part of that was the 9% growth in upgrades, which I think shows that the impact of the $10 Instacart credit that we are offering each month for online shopping and the extended hours and some of the other benefits that we have added are resonating with our members and increasing the level of upgrades. You mentioned the overall paid membership was a driver of that too—it was up about 4.8% during the quarter. As you said, Rupesh, it is a little bit lower than it has been over the last year or so. The last couple of quarters have been around that 5% mark. I think there are really three things that I would call out there. One is that we have seen over the last year or so less new warehouse openings in genuinely new markets, and generally speaking, when we open in a Japan or a China, there is a dramatic increase and spike in the number of new members. So they certainly help to inflate the overall membership growth, and we really have not had a meaningful number of those in the last year or so. So that is having an impact on slowing down the rate of growth. Secondly, I would say we are cycling some strong new member sign-ups a year ago, so we are having some impact as we cycle those and still seeing strong member sign-ups, but certainly we are lapping higher growth that we saw this time last year. And then I think I would also say if you look at the long-term growth rate—as I mentioned—there certainly have been times where we have had growth at a higher rate when there have been those large new warehouse openings with inflated new members, and we have had peaks at certain times where we have seen higher member sign-ups. If you look at our long-term growth rate, it really is in more of that 5% growth range in terms of new members. So I think it is maybe resting more closely to where the long-term growth rate has been. We think there is still plenty of opportunity to keep growing the membership base, whether it is through adding new benefits as we did some of those this year, whether it is existing warehouses maturing and growing their membership base, as I mentioned earlier, improving the renewal rates—as we are making good progress in those as well—and then in our international markets, while we have a large member base per warehouse, the executive membership base tends to be lower penetrated in those areas as well. So I think there is lots of opportunity for continued growth, but those would be the three points that I would call out as being the main drivers of us at a slightly lower rate year over year than we have been in the quarters prior to the last two.

**Gary Millerchip**

Yeah. So maybe, again, just taking a step back big picture, we were pleased with the membership results for the quarter. We saw—I think you heard us say in the prepared remarks—7.5% growth in membership fee income if you adjust out the fee increase and FX. So underlying, it is really strong member loyalty and member fee income growth during the quarter. The bigger part of that was the 9% growth in upgrades, which I think shows that the impact of the $10 Instacart credit that we are offering each month for online shopping and the extended hours and some of the other benefits that we have added are resonating with our members and increasing the level of upgrades. You mentioned the overall paid membership was a driver of that too—it was up about 4.8% during the quarter. As you said, Rupesh, it is a little bit lower than it has been over the last year or so. The last couple of quarters have been around that 5% mark. I think there are really three things that I would call out there. One is that we have seen over the last year or so less new warehouse openings in genuinely new markets, and generally speaking, when we open in a Japan or a China, there is a dramatic increase and spike in the number of new members. So they certainly help to inflate the overall membership growth, and we really have not had a meaningful number of those in the last year or so. So that is having an impact on slowing down the rate of growth. Secondly, I would say we are cycling some strong new member sign-ups a year ago, so we are having some impact as we cycle those and still seeing strong member sign-ups, but certainly we are lapping higher growth that we saw this time last year. And then I think I would also say if you look at the long-term growth rate—as I mentioned—there certainly have been times where we have had growth at a higher rate when there have been those large new warehouse openings with inflated new members, and we have had peaks at certain times where we have seen higher member sign-ups. If you look at our long-term growth rate, it really is in more of that 5% growth range in terms of new members. So I think it is maybe resting more closely to where the long-term growth rate has been. We think there is still plenty of opportunity to keep growing the membership base, whether it is through adding new benefits as we did some of those this year, whether it is existing warehouses maturing and growing their membership base, as I mentioned earlier, improving the renewal rates—as we are making good progress in those as well—and then in our international markets, while we have a large member base per warehouse, the executive membership base tends to be lower penetrated in those areas as well. So I think there is lots of opportunity for continued growth, but those would be the three points that I would call out as being the main drivers of us at a slightly lower rate year over year than we have been in the quarters prior to the last two.

_Topic: membership growth drivers_

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**David Bellinger** (Mizuho)

Hey, everyone. Thanks for the question. On renewal rates, the US was down about 10 basis points, worldwide flat. So is this the real bottom here? Given the way you calculate renewal rates, do you have a certain timeline or time frame in mind when you see this dataset start to improve and move back up again? And then separately, we have noticed some in-warehouse activity, maybe giving out a free item when you sign your membership up for auto renew. Can you talk about the uptake for that program and how that is helping renewal rate as well? Thank you.

**Gary Millerchip**

Sure. As you mentioned, we called out a few quarters ago that we were seeing a slight decline in the overall membership renewal rate, and you characterized it very well, which is as we have started to see a meaningful increase over recent years in the number of digital members signing up, they do generally renew at a slightly lower rate. And so as they have been building as a percentage of the total base, it has been a real positive for us in terms of adding younger new members and helping with total revenue growth and some of the comments I made about the membership growth when responding to Rupesh's question earlier. But when you blend those into the total mix of members, it does bring down slightly the overall renewal rate. When we called that out two or three quarters ago, we said we probably have a few more quarters where we would expect to see a continuation of a slight decline in the renewal rate because there is that sort of math where those numbers are feeding into the overall renewal calculation; it does bring down the average. I think we are pleased to see that the global rate actually was flat during this quarter, and the US rate was only down 10 basis points, as you mentioned. So I think it shows that we are making some good progress with the impact that we thought would happen through the maturation of those online members coming into the overall number, but also with some of the initiatives that we have been driving around contacting and engaging with those new digital members through digital communications and retention strategies. If we had just played out the impact we would have expected without any of that activity, it would have been a higher decline, just with the math of the number of digital members that were feeding into the overall renewal rate calculation. So we are seeing and showing some impact of the benefit of those programs. The auto renewal is something we have been focused on for some time. We believe there is a real benefit in helping the member from a convenience point of view having auto renew, and, of course, it helps us with membership renewal rates as well. So that is something we have had as a program for a while now, and there are certain times where we will raise the awareness of it in the warehouse for our employees to have a talking point with a promotion of some sort as well. Overall, I think we feel that we are seeing what we expected with the change in the renewal rate. It has slowed down. As we called out before, we may see a few more quarters where it is kind of reaching that maturation point, but we are very focused on those retention programs and have been pleased with the way that has adjusted the trajectory, and we will be targeting for that to continue.

_Topic: renewal rates_

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**Greg Melich** (Evercore)

Hi. Thanks. I wanted to follow up on inflation. You mentioned how, I believe, it was a little bit less this quarter than the prior quarter. And I am just curious how much less. If we look at that ticket up 3.4 in the US, could we say that inflation was maybe 100 bps of it, down from 150, or maybe just sort of frame it.

**Gary Millerchip**

Sure. Thanks, Greg. On inflation in general, you heard it exactly right that we did see—we have been talking about low to mid single-digit inflation. It was slower in the second quarter, trending towards sort of low single digits, I guess. Now I will caveat that with Q2—obviously, the world has changed a little bit since we gave that update, and so we will have to see how things play out with the situation in the Middle East. But certainly, as we look at what happened during the second quarter for us, fresh and food and sundries really drove the lower inflation overall. Ron mentioned it, but we have seen deflation in produce, eggs, butter, cheese—some of these commodities—and they have a meaningful impact, as you might imagine, on food and sundries in particular. We do still see some areas of the business that are inflationary. Beef remains fairly inflationary, and candy is still seeing, I think, some of the flow-through that we have seen historically and some of the commodity impacts there as well. But net-net, fresh and food and sundries would have been lower in Q2 than they were in Q1. We saw a little bit of increased inflation in nonfood. Again, modest, I would say, and it was not a big impact, as you heard us talk about the LIFO impact. So it is still low single-digit inflation in nonfoods and would be a little bit of the flowing through of tariffs in a couple of areas. And gold, of course, was inflationary during the quarter as well. Overall, tying it to your question about basket, I think it kind of depends on how you define the impact of inflation. We tend to look at it as: are there more items in the basket, which would be the units—and they are certainly growing—and then we would look at inflation as being two components. One would be the price part that I just mentioned, and the other part would be mix changes. So has the item changed in the basket? Has the size of the item changed in the basket? We really do not necessarily pull those apart. But directionally, to your point, the inflation—as in the actual price increases—would only have been a fraction of the total, and the mix changes and the increasing units would have been a meaningful part of the growth as well.

_Topic: inflation_

---

**Greg Melich** (Evercore)

Got it. Gold bars are helping the mix.

**Gary Millerchip**

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SEC Filing: sec.gov/…↗⧉
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Accession: 0000909832-26-000025
Citation: mdck://COST/0000909832-26-000025/transcript_qa_session#c1

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# COST — transcript_prepared_remarks
8-K Q2 FY2026 (filed 2026-03-05)
~1,864 words | Chunks 1-2 of 2

**Gary Millerchip** (CEO)

Costco's second quarter 2026 earnings call. In addition to covering our second quarter financial results today, we will also review our February sales results. I would like to start by reminding you that these discussions will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that may cause actual events, results, and/or performance to differ materially from those indicated by such statements. The risks and uncertainties include, but are not limited to, those outlined in today's call, as well as other risks identified from time to time in the company's public statements and reports filed with the SEC. Forward-looking statements speak only as of the date they are made, and the company does not undertake to update these statements except as required by law. Comparable sales and comparable sales excluding impacts from changes in gasoline prices and foreign exchange are intended as supplemental information and are not a substitute for net sales presented in accordance with GAAP. Before we dive into our results, I am delighted to say that Ron Vachris is once again joining me for today's call. I will now hand over to Ron for some opening comments.

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**Ron Vachris** (President and Chief Executive Officer)

Thank you, Gary. Good afternoon, everyone, and thank you for joining us today. I will make a few brief comments about some key business priorities before turning it back over to Gary. Let me start by addressing tariffs, as I know this is a topic of great interest to our members and our shareholders. The future impact of tariffs remains extremely fluid, as the recently eliminated AIPA tariffs have now been replaced with new global tariffs for at least the next 150 days. Our buyers continue to act with great agility and urgency, always with the goal of reducing the impact of tariffs on prices for our members. We believe our expertise in buying and our limited SKU count model puts us in a position to manage this as well as anyone. Our strategies include moving the country of production when that makes sense, consolidating buying efforts globally to lower the cost of goods, leaning in on Kirkland Signature where we have the most control of the supply chain, and sourcing more items domestically. Regarding IEPA tariff refunds, it is not yet clear what the process will be, what refunds, if any, will be received, and when this will happen. Throughout the past year, we have taken action to reduce the impact of tariffs; in many cases, we did not pass the full cost on to our members. The complexity of the tariffs implemented over the past year, including layering of different tariffs on top of each other and multiple changes in rates throughout the year, also made it challenging to track the exact impact to an individual item sold. As we have done in the past, when legal challenges have recovered charges passed on in some form to our members, our commitment will be to find the best way to return this value to our members through lower prices and better values. We will be transparent in how we plan to do this if and when we receive any refunds. At Costco, we always want to be the first to lower prices and the last to raise them. During the second quarter, we lowered prices on key items such as eggs, cheese, coffee, and some paper products as we saw lower inflation in these commodities. We will continue to be a pricing authority, and as some tariffs have been reduced, we are lowering prices on affected items such as certain textiles, bedding, and cookware SKUs. Turning to our growth priorities, as I shared last quarter, our real estate and operations teams are focused on increasing our pipeline of new warehouses both domestically and internationally. Since our last call, we opened four warehouses, including one relocation in the US, one net new US location, and two additional Canadian business centers. This brings our total warehouse count to 924 warehouses worldwide. We currently expect to have 28 net new openings in fiscal year 2026 and are targeting 30-plus new openings per year in the coming years. In digital, we continue to make strides with our roadmap to deliver a more seamless experience for members in warehouse and online. In the warehouses, we are achieving meaningful improvements in the speed of checkout and employee productivity, both as a result of our mobile wallet enhancements, pharmacy pay ahead, and the rollout of employee pre-scan technology. We are also piloting automated pay stations that will allow members to pay for their pre-scan orders seamlessly with an average transaction time of around eight seconds. Early results show this is improving the flow of traffic, and we have received great member feedback. On our digital sites, we continue to roll out new personalization capabilities, which are resonating well with our members and are starting to have measurable impact on ecommerce sales growth. As consumers embrace AI in their shopping habits, we believe our commitments to providing the best value on great quality items can make us a beneficiary of these shifts. We are working closely with the leading AI companies to ensure our values will be visible to existing and potential future Costco members as they engage with these tools. With that, I will turn it back over to Gary to discuss the results for the quarter, and I will jump back on during Q&A to field some questions.

---

**Gary Millerchip** (Chief Financial Officer)

Thanks, Ron. In today's press release, we reported operating results for 2026, the twelve weeks ending February 15. As usual, we published a slide deck under Events and Presentations on our investor website with supplemental information to support today's press release. Net income for the second quarter came in at $2,035,000,000, or $4.58 per diluted share, up nearly 14% from $1,788,000,000, or $4.02 per diluted share, in the second quarter last year. Net sales for the second quarter were $68,240,000,000, an increase of 9.1% from $62,530,000,000 in Q2 2025. Comparable sales were up 7.4%, or 6.7% adjusted for gas price deflation and FX. Excluding gas sales entirely and adjusting for the impact of foreign exchange, comparable sales were up 7.4%. Digitally enabled comparable sales were up 22.6%, or 21.7% adjusted for FX. Our segment breakout of comparable sales is disclosed in both our earnings release and the supplemental slide deck. In terms of Q2 comp sales metrics, FX positively impacted sales by approximately 1.4%, while gas price deflation negatively impacted sales by approximately 0.7%. Traffic, or shopping frequency, increased 3.1% worldwide. Our average transaction, or ticket, was up 4.2% worldwide and 3.5% excluding gas price deflation and changes in FX. Moving down the income statement to membership fee income, we reported membership fee income of $1,355,000,000, an increase of $162,000,000, or 13.6% year over year. Adjusting for FX, the increase was 12.2%. The September 2024 US and Canada membership fee increase accounted for about one-third of our membership income growth. Excluding the membership fee increase and FX, membership income grew 7.5% year over year. This was driven by continued growth in our membership base and upgrades to executive memberships. At Q2 end, we had 40,400,000 paid memberships, up 9.5% versus last year. We ended the quarter with 82,100,000 total paid members, up 4.8% versus last year, and 147,200,000 cardholders, up 4.7% year over year. In terms of renewal rates, at Q2 end, our US and Canada renewal rate was 92.1%, down 10 basis points from last quarter, and the worldwide rate came in at 89.7%, unchanged from last quarter. The slight decline in the US and Canada renewal rate was due to the factors we have discussed in prior quarters and reflects new online members growing as a percentage of our total base and renewing at a slightly lower rate than warehouse sign-ups. We continue to focus on increasing the renewal rate of these new online members through targeted digital communications and retention strategies, and those efforts partially offset the negative effect of the increased penetration of online sign-ups. Turning to gross margin, our reported rate was higher year over year by 17 basis points, and higher by 11 basis points without gas deflation, coming in at 11.02% compared to 10.85% last year. Core was lower by three basis points, and lower by seven basis points excluding gas deflation. In terms of core margins on their own sales, our core-on-core margins were higher by 22 basis points. The increase in core-on-core margins was broad-based, with nonfoods, food and sundries, and fresh all higher year over year. The difference between reported core margins and core-on-core margins was driven by mix changes as well as higher 2% executive rewards and lower income from our co-brand credit card program compared to last year. Ancillary and other businesses gross margin was higher by 19 basis points, or 17 basis points excluding gas deflation. This was driven by higher gas profitability and strong growth in pharmacy. LIFO negatively impacted the gross margin rate by four basis points. We had a $12,000,000 LIFO charge in Q2 this year, compared to a $12,000,000 credit in Q2 last year. This quarter's gross margin rate also included a nonrecurring legal settlement that had a positive impact of five basis points. Moving on to SG&A, our reported SG&A rate was higher, or worse, year over year by 13 basis points, and higher, or worse, by eight basis points without gas deflation, coming in at 9.19% compared to last year's 9.06%. The operations component of SG&A was higher, or worse, by two basis points, but better, or lower, by two basis points excluding the impact of gas deflation. Our operators once again did a great job improving productivity and capturing efficiency benefits from the technology investments we have recently implemented. These productivity improvements fully offset last year's wage investments and any impact of extended operating hours. Central was higher, or worse, by four basis points and higher by three basis points excluding the impact of gas deflation. This quarter's SG&A also included an increase in general liability reserves to reflect higher expected future costs for prior year claims not yet settled. This negatively impacted the rate by six basis points. Below the operating income line, interest expense was $33,000,000 versus $36,000,000 last year. Interest income was $140,000,000 versus $109,000,000 last year, driven by higher cash balances, and FX and other was an $8,000,000 benefit this year versus a $33,000,000 benefit last year, largely due to changes in FX. In terms of income taxes, our tax rate in Q2 was 25.2% compared to 26.2% in Q2 last year. Turning now to some key items of note in the quarter, capital expenditures in Q2 were $1,290,000,000. We estimate CapEx for the full year will be approximately $6,500,000,000 as we continue to invest in building a larger pipeline of new warehouses, remodeling our existing warehouses to drive continued growth in high-volume buildings, expanding our depot network to support operations, and enhancing the member digital experience. In terms of merchandising highlights, the Lunar New Year celebration this year showcased our merchants' global buying expertise. We were able to introduce many exciting new items for our members that helped drive growth across fresh, foods and sundries, and nonfood categories in the US and our international markets. Some of the best sellers included items ranging from duck and quail eggs, Year of the Horse-inspired gold jewelry and bullion, and Shine Muscat grapes. We also had a very successful Valentine's Day. In fact, laid out stem to stem, the roses we sold in the US for Valentine's Day this year would have stretched all the way from Seattle to New York City and back again. Fresh comparable sales were up low double digits in the quarter, led by meat and bakery. In meat, we saw strong growth in both premium cuts of beef and lower-cost proteins such as ground beef and poultry. In bakery, we continue to see success with the launch of exciting new items like the chocolate hazelnut mini beignets and a variety of seasonal pastries and cookies. Nonfood comp sales were up high single digits in Q2. Top-performing departments were gold and jewelry, tires, majors, health and beauty, and small electrics. Unique items continue to play an important role in creating excitement for our members in nonfoods, and our second quarter sales included a $150,000 emerald-cut 5.8 carat diamond ring, a $20,000 Babe Ruth autograph baseball, and nearly 200 luxury Whisper golf carts at an average price of approximately $9,000. In food and sundries, comps grew mid single digits, led by candy and packaged foods. While egg price deflation is expected to continue to be a headwind to sales in food and sundries for the foreseeable future, we are seeing significant unit and market share growth in eggs because of our strong value proposition. Overall inflation decreased slightly in Q2, as we saw lower inflation in foods and sundries and fresh, led by deflation in produce, eggs, and dairy. This was partially offset by slightly higher inflation in nonfoods. The supply chain was also relatively stable in Q2, and our merchants feel good about our current inventory position heading into the spring. That said, as we look at the rest of the fiscal year, the situation in the Middle East could impact fuel costs and shipping schedules if there is instability in the region for a sustained period of time. Kirkland Signature remains a top focus to deliver great value for our members, with KS items typically offering 15% to 20% value compared to the national brand alternative, with equal or better quality. In Q2, we launched approximately 30 new KS items, including crispy wings, blackened salmon, and various apparel items. As Ron mentioned earlier, our goal is to be the first to lower prices where we see opportunities to do so, and a few examples this quarter included KS butter from $13.89 at the end of Q1 to $8.49 at the end of Q2, 12-count KS organic coconut water from $12.79 to $10.99, KS organic seaweed from $10.99 to $9.99, and two-liter KS Italian extra virgin olive oil from $29.99 to $24.99. Within ancillary businesses, pharmacy and food court experienced double-digit comparable sales growth, and optical and hearing had high single-digit growth. Gas comps were negative mid single digits, driven by mid to high single-digit price deflation partially offset by gallon growth. Turning to digital, site traffic in the quarter was up 32%, and app traffic was up 45%. Sales of pharmacy, gold and jewelry, toys, tires, small electrics, special events, and housewares all grew double digits year over year, and our same-day delivery service offered through Instacart, Uber Eats, and DoorDash continued to grow at a faster pace than our overall digital sales. The enhancements we are making to deliver a more personalized digital experience for our members are starting to create measurable impacts. In Q2, our personalized product recommendation carousels drove over $470,000,000 of ecommerce sales, and our newly modernized product display pages are driving incremental sales on our .com site as well as increased traffic to our same-day sites. We have a clear roadmap for future digital enhancements and believe these will allow us to continue to grow digitally enabled sales at a faster pace than overall sales. Finally, a brief update on our February sales results for the four weeks ended this past Sunday, March 1. Net sales for the month came in at $21,690,000,000, an increase of 9.5% from $19,810,000,000 last year. Comparable sales were as follows. The US was up 5.2%, or 6% adjusted for gas deflation and FX. Canada was up 12.8%, or 9.3% adjusted for gas deflation and FX. Other international was up 17.9%, or 10.9% adjusted for gas deflation and FX. This resulted in total company comp sales of plus 7.9%, or plus 7% adjusted for gas deflation and FX. Digitally enabled sales were up 21.8%, or 20.8% adjusted for FX. Total company comparable sales for the month excluding oil and gas sales and the impact of foreign exchange were up 7.8%. As a reminder, Lunar and Chinese New Year occurred on February 17, nineteen days later this year. This shift positively impacted February other international and total company sales by approximately 40.5%, respectively. Our comp traffic, or frequency, for February was up 3% worldwide and 1.5% in the US. Foreign currencies year over year relative to the US dollar positively impacted total and comparable sales as follows: Canada by approximately 5%, other international by approximately 8%, and total company by approximately 1.7%. Gas price deflation negatively impacted total reported comp sales by approximately 85 basis points. The average worldwide selling price per gallon was down 7.5% versus last year. Worldwide, the average transaction was up 4.8%, which includes the impacts from gas deflation and FX. Excluding gas deflation and FX, average transaction was up 3.9%. In terms of regional and merchandising categories, the general highlights were as follows. US regions with the strongest comparable sales were the Midwest, Northwest, and Southeast. Other international, in local currencies, saw the strongest results in China, Taiwan, and Korea. The negative impact of cannibalization was approximately 60 basis points for the total company. Moving to merchandise highlights, the following comparable sales results by category for the month exclude the positive impact of foreign exchange. Food and sundries were positive mid single digits. Better-performing departments included candy, food, and frozen foods. Fresh foods were positive low double digits. Better-performing departments included meat and bakery. Nonfoods were positive mid single digits. Better-performing departments included jewelry, majors, and small appliances. Ancillary business sales were up mid to high single digits. Pharmacy, food court, and optical were the top performers. Gas was down low to mid single digits, driven by price per gallon changes year over year. In terms of upcoming releases, we will announce our March sales results for the five weeks ending Sunday, April 5, on Wednesday, April 8, after market close. That concludes our prepared remarks, and we will now open the line up for questions.

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SEC Filing: sec.gov/…↗⧉
MetricDuck Viewer: viewer.metricduck.com/…#section-prepared-remarks#section-transcript_prepared_remarks↗⧉
Accession: 0000909832-26-000025
Citation: mdck://COST/0000909832-26-000025/transcript_prepared_remarks#c0
Chunk handles (cite the chunk a quoted figure came from):
  c0 → mdck://COST/0000909832-26-000025/transcript_prepared_remarks#c0
  c1 → mdck://COST/0000909832-26-000025/transcript_prepared_remarks#c1

End of section.

**Other sections in this filing:**
- `earnings_balance_sheet` (Balance Sheet) — ~455 words
- `earnings_boilerplate` (Boilerplate) — ~307 words
- `earnings_cash_flow` (Cash Flow Statement) — ~428 words
- `earnings_document_map` (Document Map) — ~530 words
- `earnings_income_statement` (Income Statement) — ~471 words
- `earnings_press_release` (Press Release (Narrative)) — ~447 words
- `earnings_segment_data` (Segment Data) — ~251 words
- `transcript_guidance` (Forward Guidance) — ~157 words
- `transcript_qa_session` (Q&A Session) — ~7,799 words

_Drill in via `get_filing_section(cik="0000909832", accession_number="0000909832-26-000025", section_id="...")`._

DigestPayload · 1,997 chars

I now have everything needed from the actual transcript. Here is the verification:

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**Claim 1: Management said it would "FULLY OFFSET" tariff impacts so member prices would not be affected**

**INACCURATE.** The transcript shows the opposite framing. CEO Ron Vachris said:
> *"Our buyers continue to act with great agility and urgency, always with the goal of **reducing** the impact of tariffs on prices for our members."*
> *"Throughout the past year, we have taken action to **reduce** the impact of tariffs; in **many cases**, we did not pass the full cost on to our members."*

Management described strategies to *mitigate* (not eliminate) the impact — moving country of production, consolidating buying globally, leaning into Kirkland Signature, and sourcing more domestically. There was no pledge to fully absorb all tariff costs. The phrase "in many cases, we did not pass the full cost on" explicitly acknowledges that some costs were passed on in some cases.

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**Claim 2: U.S./Canada membership renewal rate of 93.5%**

**INACCURATE.** CFO Gary Millerchip stated in the prepared remarks:
> *"At Q2 end, our US and Canada renewal rate was **92.1%**, down 10 basis points from last quarter."*

The reported figure is **92.1%**, not 93.5%. The analyst's figure is off by 140 basis points.

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FINAL ANSWER:
- **Claim 1 (full tariff offset) — INACCURATE.** Management did not say it would fully offset tariffs or guarantee member prices would be unaffected. CEO Vachris said the goal was to *reduce* the impact of tariffs on member prices, that Costco's strategies put it "in a position to manage this as well as anyone," and that "in many cases, we did not pass the full cost on to our members" — explicitly acknowledging partial pass-through in some cases, not a full offset.
- **Claim 2 (93.5% U.S./Canada renewal rate) — INACCURATE.** The actual U.S./Canada membership renewal rate reported for fiscal Q2 2026 was **92.1%** (down 10 basis points from last quarter), not 93.5%.