Costco received $184 million in IEEPA tariff refunds in its fiscal fourth quarter and spent part of it on lower member prices, CFO Gary Millerchip said on the earnings call. The total was $174 million in refunds plus $10 million in interest. Millerchip said it is a little more than a third of the refunds Costco expects.
Any retailer with a refund claim at CBP is choosing between shelf price, margin and cost offsets. Costco is sending most of what comes next into price. CEO Ron Vachris pledged this spring to return to members “in some form the portion of tariffs that were passed on to them.”
The cuts ran through produce, meat, beverages, home furnishings and hardware in the second half of the quarter. Millerchip gave these examples:
Kirkland Signature walnuts, from $13.79 to $9.99
Kirkland Signature Colombian whole bean coffee, from $21.99 to $19.99
Kirkland Signature coarse black pepper, from $6.99 to $5.99
The refunds added a non-recurring $0.15 a share to fourth-quarter earnings of $6.75, net of the price cuts, per the results release. Net sales rose 11.2% to $93.9 billion in the 16-week quarter. Millerchip put the net refund benefit at 9 basis points of gross margin.
Walmart has put its $2.9 billion toward “customer experience and price leadership” in grocery and general merchandise. BJ’s Wholesale put about $20 million of refunds into shelf prices in its first quarter. Target booked its $994 million as a reduction in cost of sales. Home Depot is using its $730 million to offset fuel, energy and product input costs.
At least 75% of US companies receiving refunds plan to hold them as cash, according to an Atlanta Fed survey. About 15% plan to lower prices.
Millerchip said Costco has already received a similar amount in the first quarter of fiscal 2027. The company intends “to continue reinvesting the majority of the dollars we receive in increased member values,” he said.
