Costco got $184 million in tariff refunds and spent most on lower prices; only about $67 million reached profit

Costco received $184 million in tariff refunds in its fiscal fourth quarter and put most of it into lower prices, executives said on Thursday's earnings call, Fox Business reported. Chief financial officer Gary Millerchip said the total was $174 million of refunds plus $10 million of interest, a little over one-third of all the refunds Costco expects, and that a similar amount has already come in during the current quarter.

Chief executive Ron Vachris said the price cuts landed in the second half of the quarter on "everyday items in produce, meat and beverages and some nonfood items such as home furnishings and hardware." Millerchip said Costco intends to keep reinvesting "the majority of the dollars" it receives and will report the net effect each quarter through fiscal 2027.

The shares were up 2.8% at $921.41 at 2:56 p.m. ET, according to Nasdaq.com.

How much Costco actually kept

Costco's results release put the net benefit to earnings at 15 cents a share, after the price reinvestment. Net income of $2.998 billion at $6.75 a share implies about 444 million shares, so 15 cents works out to roughly $67 million of profit. Part of the gap to $184 million is tax, so the two numbers are not directly comparable, but the arithmetic fits Costco's statement that the majority went back to members rather than to the bottom line.

If "a little over one-third" is taken literally, the total Costco expects is somewhat under $550 million. With another similar check already in hand this quarter, the price cuts can run for a while.

Not every company is doing this

Companies are treating the same kind of money very differently, and the disclosures show it:

Nike's figures are from its June results; Cracker Barrel's from our report on its results. Among smaller firms, an Atlanta Fed survey found that 70% of those getting refunds plan to keep some as cash.

The reason matters for anyone reading earnings this season. A retailer that spends its refund on prices reports a smaller one-time gain but may win customers. One that books it shows a better quarter that will not repeat. See our Nike preview for how that plays out in one set of numbers.

Who it hits: the grocer down the road

Costco chose produce, meat and beverages, the categories that bring people through a grocery store's door. An independent grocer that bought from domestic distributors, rather than importing directly, may have no refund of its own to fund a matching cut. It may be competing against prices paid for with money it will never receive.

109,039 independent grocery and convenience are listed on CheckThisBiz, a directory of 7,704,724 independent US businesses, including 10,080 in CA, 10,031 in NY, 9,014 in TX. Chains and franchises are excluded from that count, so these are the owner-operated businesses that actually apply for funding.

For those owners, the practical step is to check whether any of their suppliers paid IEEPA tariffs as importer of record and whether they are passing refunds through. The Atlanta Fed survey found only about a quarter of firms think they qualify at all.

Sources: Fox Business; Costco and Nike SEC filings; Nasdaq.com; Chronicle reporting. Share-count and profit estimates are Chronicle calculations. This is market information, not investment advice.