Total company comparable sales increased 6% for the 12 weeks ended May 11, 2025, and 8% when excluding the impact of foreign currency and gasoline price deflation. U.S. comparable sales, excluding these factors, grew 8%, demonstrating sustained organic growth across its core markets.

Membership fee revenue rose 10% to $1,240 million in Q3 2025, primarily due to new member sign-ups and fee increases implemented in September 2024, which contributed approximately 4% of the revenue growth. U.S. and Canada renewal rates remained high at 92.7%, indicating strong member loyalty.

The Company opened 17 net new warehouses in the first thirty-six weeks of 2025 and plans to open an additional 10 new warehouses in the remainder of fiscal 2025. This expansion reflects a continued strategy to increase its global footprint and drive future sales growth, particularly in international markets where square footage growth is higher.

While SG&A expenses as a percentage of net sales increased by 20 basis points in Q3 2025, management explicitly noted this was due to investments in employee wages and a one-time vacation expense. Despite these investments, the company achieved a 41 basis point increase in gross margin, showcasing an ability to balance strategic spending with overall profitability.

Management's decision to increase capital expenditures to over $5,000 million for fiscal 2025, primarily for new warehouses and infrastructure, indicates a clear focus on long-term growth. Simultaneously, a 12% increase in the quarterly cash dividend and ongoing share repurchases demonstrate a commitment to returning value to shareholders.

The company's philosophy of maintaining 'pricing authority' by offering competitive values, even by absorbing some cost increases, highlights a strategic approach to customer retention and market positioning. This long-term view on pricing, rather than short-term maximization, is a key element of its sustained success in a competitive retail environment.

The company faces several active legal proceedings, including class action suits related to California Labor Code violations, privacy law violations (pixel trackers), and false advertising claims (baby wipes). Additionally, it is involved in opioid litigation, a False Claims Act investigation, and an EPA administrative fine, indicating a broad range of legal exposures.

Changes in foreign currencies relative to the U.S. dollar negatively impacted net sales by approximately $699 million (122 basis points) in Q3 2025 and $2,107 million (123 basis points) for the first thirty-six weeks of 2025. This volatility introduces an ongoing risk to reported financial performance, particularly for international operations.

The company stated that there have been no material changes to its market risks, including those related to foreign-currency exchange rates and interest rates, as disclosed in its Annual Report on Form 10-K. While this indicates stability in the risk profile, it also means existing market-related risks persist.

The membership format is an integral part of Costco's business, designed to reinforce member loyalty and provide continuing fee revenue. High renewal rates of 92.7% in the U.S. and Canada and 90.2% worldwide underscore the strength of this model in fostering a loyal customer base and contributing significantly to overall profitability.

Costco's core concept of offering members low prices on a limited selection of products, combined with high sales volumes and rapid inventory turnover, enables it to operate profitably at significantly lower gross margins than most other retailers. This strategy is a key differentiator in a competitive retail landscape.

Management acknowledges that competition is 'vigorous and widespread' across a wide range of global, national, and regional wholesalers and retailers, including those with e-commerce operations. This intense competitive environment necessitates continuous adaptation in pricing and merchandise mix to maintain market share.

The gross margin percentage increased by 41 basis points to 11.25% in Q3 2025, primarily driven by a 27 basis point improvement in core merchandise categories (fresh foods and foods & sundries) and 27 basis points in warehouse ancillary businesses. This indicates strong operational execution in sourcing and pricing merchandise.

SG&A expenses as a percentage of net sales increased 20 basis points to 9.16% in Q3 2025. This was partly attributed to the company's investment in employee wages and a one-time expense for increased employee vacation, reflecting a management philosophy of maintaining compensation levels above industry average to reduce turnover and enhance productivity.

The company's business model emphasizes 'rapid inventory turnover,' and merchandise inventories remained relatively stable at $18,606 million at May 11, 2025, compared to $18,647 million at September 1, 2024. This efficiency in inventory management contributes to strong cash flow from operations, as the company often sells inventory before payment is due.

E-commerce comparable sales increased 15% for the 12 weeks ended May 11, 2025, and 16% for the first thirty-six weeks of 2025. This sustained growth indicates the company's digital platforms are effectively contributing to overall sales and reaching members through online channels.

While e-commerce growth is positive, the company noted that sign-ups from a digital promotion in fall 2023 and higher penetration of online sign-ups negatively impacted renewal rates. This suggests a need to optimize digital strategies to ensure long-term membership retention aligns with overall growth objectives.

Capital expenditure plans for fiscal 2025, projected to be over $5,000 million, include investments in 'information systems' and 'manufacturing and distribution facilities'. While not explicitly detailed as R&D, this indicates a commitment to enhancing technological infrastructure to support operations and digital transformation efforts.

The Board declared a quarterly cash dividend of $1.30 per share on April 16, 2025, representing a 12% increase from the prior year's $1.16 per share. This significant increase reflects management's confidence in the company's sustained profitability and robust cash flow generation.

Costco repurchased 215,000 shares for $210 million during Q3 2025, at an average price of $976.71 per share. For the first thirty-six weeks of 2025, 658,000 shares were repurchased for $623 million, demonstrating an ongoing commitment to enhancing shareholder value through active capital management.

The company spent $3,532 million on capital expenditures in the first thirty-six weeks of 2025, with plans to spend slightly over $5,000 million for the full fiscal year. These investments are primarily directed towards acquiring land, buildings, and equipment for new and remodeled warehouses, underpinning the company's growth strategy.

The 10-Q filing provides minimal specific details on ongoing ESG initiatives. While 'attainment of sustainability goals' and 'regulatory and other impacts related to environmental and social matters' are mentioned in forward-looking statements as potential risks, there are no quantitative or qualitative updates on specific programs or progress.

The company is involved in legal proceedings, including an administrative complaint from the EPA regarding alleged violations of the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) and class action lawsuits concerning labor code violations. While not direct ESG initiatives, these cases underscore potential compliance risks related to environmental and social governance.

Management's philosophy to maintain employee compensation levels 'better than the industry average' to reduce turnover, increase productivity, and enhance satisfaction, as noted in the MD&A, reflects a social responsibility aspect. This strategic investment in human capital, though impacting SG&A, aligns with positive social governance practices.

Lower gasoline prices negatively impacted net sales by $642 million (112 basis points) in Q3 2025, with the average price per gallon decreasing 9%. While gasoline sales volume increased approximately 1%, the price deflation still exerted downward pressure on reported net sales figures.

Changes in foreign currencies relative to the U.S. dollar negatively impacted net sales by approximately $699 million in Q3 2025 and net income by $35 million. This highlights the ongoing sensitivity of Costco's international operations to global currency fluctuations.

Despite facing macroeconomic factors such as inflation, deflation, and exchange rate volatility, Costco achieved strong revenue and comparable sales growth. Management's discussion acknowledges these external factors, suggesting the company's business model is resilient in navigating diverse economic conditions.