Costco Reinvested $184 Million in Tariff Refunds Into Price Cuts

Costco collected $184 million in tariff refunds during its fourth quarter and pushed much of that money straight back to shoppers through price cuts on everyday items.

CFO Gary Millerchip disclosed the figure on the company's earnings call, noting the amount represents roughly one-third of the total refunds Costco expects to receive. By the time executives spoke with analysts on Thursday, the retailer had already pulled in about the same amount again in the first quarter of fiscal 2027.

The refunds stem from tariffs Costco paid on imported goods, money the company has now begun recovering. CEO Ron Vachris previously said the company would return the funds to customers "in some form." On the call, he confirmed the mechanism: price reductions rather than direct checks.

"We received some initial refunds during the quarter and reinvested some of these dollars to give value back to our members," Vachris said.

The cuts landed in the second half of the fourth quarter. "This was predominantly through price reductions on a number of items in the second half of the quarter, including everyday items in produce, meat and beverages and some nonfood items such as home furnishings and hardware," Vachris explained.

The strategy tracks with Costco's membership model, where the company sacrifices margin on merchandise to keep renewal rates high. With two-thirds of expected refunds still to come, shoppers could see further reductions across more categories in coming quarters.

Fast Company reports it asked Costco whether direct refunds to customers remain possible. The company had not responded by publication time.

Costco's Fiscal 2026 Results

The tariff update accompanied a strong close to the fiscal year. Costco posted fourth-quarter net income of $2.998 billion, up from $2.610 billion a year earlier. Full-year net income rose to $9.226 billion from $8.099 billion.

The company ended the year with 939 warehouses worldwide, a net increase of 25 locations year over year.

Shares of Costco (Nasdaq: COST) traded essentially flat in premarket trading on Friday. The stock entered the session up 4.91% year to date as of Thursday's close.

With another $184 million or so in refunds already banked in the first quarter of fiscal 2027, the question for investors is how quickly Costco converts that cash into shelf prices — and how much of the benefit lands in members' baskets rather than the margin line.