Tariff Peak, 'Gold Lap Effect' Weigh On Costco's May Sales, Says JPMorgan

JPMorgan analyst Christopher Horvers reiterated an Overweight rating on Costco Wholesale Corporation COST after the company reported May sales results on Wednesday.

The company reported net sales of $20.97 billion for the four weeks ended June 1, 2025, up 6.8% year-over-year.

Comparable sales, excluding the impacts from changes in gasoline prices and foreign exchange, grew 6%, with growth of 5.5% in the U.S. and 6.3% in Canada.

The analyst writes that comparable sales in the U.S. missed both Street’s +6.4% (consensus metrix) and JP Morgan’s estimate of +7.0%, representing a rare miss for the company.

Horvers says he observed an unusually high volume of inquiries regarding comp expectations leading into this report, which often signals an anticipated miss.

Several retailers have also indicated May was slower than March and April, attributing it to weather headwinds, adds the analyst.

The analyst noted Costco typically disregards the weather’s impact on business unless an extreme event occurs.

However, Horvers believes unfavorable weather did affect May’s performance, given the widespread cold and rain, particularly over the crucial Memorial Day weekend.

Besides, the Northeast, which experienced tougher year-over-year weather during recent weekends, dropped from Costco’s list of top-performing regions, adds the analyst.

The analyst also says Costco observed that the tariff-induced pull-forward impact reached its peak in April, primarily affecting major appliances but also prompting some related buying in paper goods, reminiscent of last year’s port strike threats and the lingering memory of COVID-era out-of-stocks.

Also, Horvers writes the “gold lap” effect is steepening through August, though its overall impact remains immaterial.

While the direct influence on core comparable sales is well under one point for the U.S. core comp (Costco previously implied about 20 basis points in the first quarter of FY24 before the peak), the comparative impact intensifies through August, adds the analyst.

Furthermore, new warehouse cannibalization is expected to remain around the 70-basis-point level for some time, given the increased number of infill openings in the past year, says the analyst.

COST Price Action: Costco shares are down 3.31% at $1,016.84 at publication on Thursday.

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