Costco's IEEPA Tariff Refunds to Shape Fiscal 2027 Earnings

Zacks Investment Research··US·Read original
3▲3 ▼0Impact / 5
Summary · why it matters

Costco Wholesale Corporation received $184 million related to International Emergency Economic Powers Act tariffs in the fourth quarter of fiscal 2026, comprising $174 million of refunds and $10 million of interest, which management said represented a little more than one-third of the total refunds expected. The tariff refunds, net of partial reinvestment in member value, contributed a nonrecurring benefit of 15 cents per share in the quarter; excluding that benefit, net income and earnings per share rose 12.3% and 12.4%, respectively, while refunds and related reinvestment added nine basis points to gross margin. Costco intends to reinvest the majority of future refunds in increased member value, primarily through lower prices, after directing fourth-quarter investments into produce, meat, beverages, home furnishings and hardware. Walmart Inc. said tariff refunds lifted gross profit and operating income in the second quarter of fiscal 2027, with operating income receiving an approximately 750-basis-point net benefit after price investments, while Target Corporation recognized $994 million of pretax tariff refunds in its second-quarter fiscal 2026, adding $752 million to net earnings and $1.65 to earnings per share and contributing 3.7 percentage points to both gross margin and operating margin. Costco's forward 12-month price-to-earnings ratio stands at 40.59 versus the industry's 27.39, and the Zacks Consensus Estimate for current fiscal-year earnings has risen 7 cents to $22.57 per share, with next fiscal year up 25 cents to $24.71 per share.

Impact on assets 3

Consumer Staples▲ · 3 stocks
Costco Wholesale Corp
COST
▲ PositiveTariffrelevance

Costco received $184M in IEEPA tariff refunds ($174M refunds + $10M interest), adding a 15-cent nonrecurring EPS benefit and 9bps to gross margin.

Target Corporation
TGT
▲ PositiveTariffrelevance

Target recognized $994M of pretax tariff refunds, adding $752M to net earnings and $1.65 to EPS.

Walmart Inc.
WMT
▲ PositiveTariffrelevance

Walmart said tariff refunds lifted gross profit and operating income, with an approximately 750-bps net benefit to operating income after price investments.

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