According to PYMNTS.com, in its fiscal fourth quarter earnings reported on December 11, Costco logged net sales growth of 7.2% to just under $66 billion, with comparable sales up 6.4%. CFO Gary Millerchip highlighted that digitally enabled comparable sales grew by a massive 21%. The company now has 81.4 million paid memberships, a 5.2% increase, and nearly 146 million cardholders. CEO Ron Vachris detailed tech initiatives driving this, like pre-scanning for checkout speed improvements up to 20% and AI in pharmacy inventory. Despite the strong numbers, shares dipped 0.7% in after-hours trading. Management also confirmed plans for over 30 net new store openings annually.
Checkout Wars and AI Pharmacies
So, what’s actually driving that 21% digital surge? It’s not just about selling more stuff online. Costco is finally pulling back the curtain on years of back-end tech work, and the front-end member experience is starting to show it. The big push is on friction. Pre-scanning small baskets, digital wallets, and scanning memberships at the door are all about one thing: getting you through that warehouse faster. A 20% improvement in checkout speed is a huge deal in a place known for epic lines. That’s a tangible benefit members feel immediately.
But the more fascinating tech story might be in the pharmacy. Vachris mentioned they’re using AI to compare prescription drug pricing across vendors and autonomously reorder inventory. This isn’t just a buzzword. The system has boosted in-stock rates to over 98% and contributed to “mid-teen growth” in scripts filled. Here’s the thing: it’s improving margins while lowering prices for members. That’s the holy grail for Costco—using tech to reinforce its core value proposition, not just add flashy features. It’s a perfect example of practical, profit-driving AI.
The Behind-the-Scenes Bet
Vachris’s commentary on the earnings call was really telling. He admitted they’ve “had to spend” heavily on “fundamental base systems” for a couple of years. That’s corporate speak for: our tech foundation was probably creaky, and we had to do the unglamorous, expensive work before we could build anything cool. Now they’re “starting to see the benefits.” This is a classic, and often painful, transition for massive retailers. You can’t personalize offers or build a retail media network on top of a 1990s database.
And speaking of retail media, CFO Millerchip teased the “continued upside” there. This is a huge, high-margin revenue stream for retailers with rich first-party data (like, say, a membership warehouse club). The “data and tech platform that allows us to execute personalization at scale” is the engine for that. They’re calling it “early success,” but you can bet it’s a major focus. Every other big box store is chasing this ad money; Costco’s loyal member base gives it a unique advantage if the tech platform is robust enough.
Resilience and the Kirkland Effect
Beyond the tech, the consumer behavior signals are strong. Traffic is up 2.6%, ticket size is up 3.2%. In this economy, that’s a sign of serious stickiness. People aren’t just visiting Costco, they’re loading up. The fresh grocery sales, led by double-digit meat growth, and the fact that Kirkland Signature brands are outpacing overall sales tell a clear story: the value-seeking consumer is firmly in Costco’s wheelhouse. When budgets are tight, you go where you trust the price and the quality. Costco’s tech investments seem laser-focused on making that core trip more efficient, not changing its fundamental appeal.
So, the dip in the stock after hours? Probably just noise. The narrative here is that a slow-and-steady giant has made a necessary, heavy tech investment and is now starting to see it pay off in digital sales, operational efficiency, and new revenue lines like retail media. The real test will be if they can keep this momentum going as those “30-plus” new stores open each year. But for now, the receipt scan looks good.
