COST · 10-Q · 2026Q2 · Full report
Gross Margin Drivers
COSTCO WHOLESALE CORP /NEW · 2026-06-03 · Importance 25 · Surprise 32 · No source text
Gross margin dollars were $7,635 in the third quarter of 2026 versus $6,969 in the prior year quarter, while gross margin as a percentage of net sales decreased 21 basis points to 11.04% in the quarter. Excluding the impact of gasoline price inflation, gross margin percentage improved to 11.26% (up 1 basis point), driven by a +14 basis point contribution from warehouse ancillary and other businesses (primarily pharmacy and e-commerce) and a smaller LIFO charge (+14 basis points). Core merchandise categories negatively impacted gross margin by 29 basis points in the quarter, primarily from foods and sundries and fresh foods, partially offset by co-branded credit card program and non-foods; foreign-currency changes positively impacted gross margin by approximately $69 in the quarter. Year-to-date gross margin percentage rose 1 basis point and, excluding gasoline, increased 6 basis points with similar drivers noted (pharmacy, gasoline, smaller LIFO charge and a non-recurring legal settlement).
Key facts
- Gross margin for the 36 weeks ended May 10, 2026 was $22,626 and gross margin percentage was 11.13%. source
- Gross margin for the 12 weeks ended May 10, 2026 was $7,635 and gross margin percentage was 11.04%. source
- Gross margin as a percentage of net sales decreased by 21 basis points in the third quarter of 2026; excluding gasoline price inflation gross margin percentage was 11.26%, an increase of one basis point. source
- Gross margin percentage was negatively impacted by 29 basis points in core merchandise categories in the third quarter of 2026. source
- A smaller LIFO charge in the third quarter of 2026 compared to the third quarter of 2025 positively impacted gross margin by 14 basis points. source
- The absence of a charge related to a one-time expense for increased employee vacation positively impacted gross margin by two basis points in the third quarter of 2026. source
Impact estimates
| metric | direction | stage | expected | basis |
|---|---|---|---|---|
| margin | negative | realized | -0.3% | Gross margin percentage was negatively impacted by 29 basis points in core merchandise categories in the third quarter of 2026. |
| margin | negative | realized | -0.2% | Gross margin as a percentage of net sales decreased by 21 basis points in the third quarter of 2026; excluding gasoline price inflation… |
| margin | positive | realized | +0.0% | Gross margin as a percentage of net sales decreased by 21 basis points in the third quarter of 2026; excluding gasoline price inflation… |
| margin | unclear | realized | — | Gross margin for the 36 weeks ended May 10, 2026 was $22,626 and gross margin percentage was 11.13%. |
| margin | unclear | realized | — | Gross margin for the 12 weeks ended May 10, 2026 was $7,635 and gross margin percentage was 11.04%. |