Introduction to Costco’s Quarterly Earnings

The sign on the side of a Costco is seen in Hawthorne, California, on April 4, 2025. Costco on Thursday posted quarterly earnings and revenue that topped estimates as its sales climbed 8%.

Quarterly Earnings and Revenue

Here’s how the warehouse club retailer did in its fiscal third quarter compared to what Wall Street was expecting:

• Earnings per share: $4.28 vs. $4.24 expected
• Revenue: $63.21 billion vs. $63.19 billion expected

Net Income and Revenue Growth

Costco’s net income for the three-month period that ended May 11 rose to $1.90 billion, or $4.28 per share, compared to $1.68 billion, or $3.78 a year earlier. Revenue rose from $58.52 billion in the year-ago period.

Impact of Tariffs on Costco

As tariffs raise economic worries, and potentially consumer prices, Costco could stand to benefit. Unpredictable tariff policy could help drive more customers to the warehouse club, which is known for its competitive prices and bulk discounts, and encourage them to renew membership. Its clubs also sell discounted gas and groceries, which are steadier traffic drivers even when consumers pull back on spending. And compared with some other retailers, Costco has a stronger hand in price negotiations with suppliers because of its large size.

CEO’s Perspective

On the company’s earnings call in March, CEO Ron Vachris said customers rely on Costco more in a challenging economy. "In uncertain times, our members have historically placed even greater importance on the value of high-quality items at great prices, and our teams will continue to rise to this challenge by leveraging our global buying power, strong supplier relationships and innovation," Vachris said at the time.

Imports and Tariff Effects

About a third of Costco’s U.S. sales are goods brought in from other countries, with less than half of those imports coming from China, Mexico, and Canada, Vachris said in March. Yet tariffs could also add expenses for Costco, which could mean higher prices for shoppers.

Industry Comparison

Earlier on Thursday, Best Buy CEO Corie Barry said the retailer had already raised prices on some consumer electronics because of tariffs. Cosmetics company E.l.f. Beauty announced a price increase on its makeup last week. And Walmart CFO John David Rainey warned earlier this month that higher prices were coming to the discounter’s stores and website in late May or June.

Stock Performance

As of Thursday’s close, shares of Costco are up about 10% so far this year. That has outpaced the S&P 500’s less than 1% gains during the same period.

Conclusion

Costco’s quarterly earnings and revenue have topped estimates, with an 8% climb in sales. The company’s ability to negotiate prices with suppliers and its focus on value could help it navigate the challenges posed by tariffs. However, the impact of tariffs on consumer prices remains a concern.

FAQs

• Q: How did Costco perform in its fiscal third quarter?
  A: Costco posted quarterly earnings and revenue that topped estimates, with sales climbing 8%.
• Q: What is the impact of tariffs on Costco?
  A: Tariffs could drive more customers to Costco due to its competitive prices, but may also add expenses and lead to higher prices for shoppers.
• Q: How does Costco’s performance compare to the industry?
  A: Costco’s stock is up about 10% this year, outpacing the S&P 500’s gains, while other retailers like Best Buy and Walmart have announced price increases due to tariffs.
• Q: What did Costco’s CEO say about the company’s strategy?
  A: CEO Ron Vachris said customers rely on Costco more in challenging economic times and that the company will continue to leverage its global buying power and strong supplier relationships to offer value to its members.

Introduction to Abercrombie & Fitch’s Performance

Abercrombie & Fitch’s shares soared on Wednesday, despite the company slashing its profit outlook due to tariffs that are expected to hit its business by $50 million. The retailer is now expecting full-year earnings per share to be between $9.50 and $10.50, down from a previous range of between $10.40 and $11.40. Analysts were expecting earnings of $10.33 a share.

Financial Performance and Outlook

The company cut its operating margin forecast, another closely watched metric by investors. It’s now expecting its operating margin to be between 12.5% and 13.5%, down from a previous range of between 14% to 15%. The company’s guidance includes the estimated impact from tariffs that are currently in effect, including a 30% tariff on imports from China and a 10% levy on goods from dozens of other countries. It excludes other currently paused tariffs.

First-Quarter Results

Abercrombie reported fiscal first-quarter results that beat Wall Street’s expectations on the top and bottom lines. Here’s how the apparel company performed in the fiscal first quarter compared with expectations:

• Earnings per share: $1.59 vs. $1.39 expected
• Revenue: $1.10 billion vs. $1.07 billion expected
  The company’s reported net income for the three-month period that ended May 3 was $80.4 million, or $1.59 per share, compared with $114 million, or $2.14 per share, a year earlier.

Sales Performance

Sales rose to $1.10 billion, up about 8% from $1.02 billion a year earlier. In a news release, Abercrombie said sales reached a record high for the fiscal first quarter. "This was above our expectations and was supported by broad-based growth across our three regions," CEO Fran Horowitz said in a statement. Hollister brands led the performance with growth of 22%, achieving its best ever first quarter net sales, while Abercrombie brands net sales were down 4% against 31% sales growth in 2024.

Guidance and Expectations

Beyond its profit outlook, Abercrombie slightly raised its full-year sales guidance and is now expecting revenue to rise between 3% and 6%, up from a previous range of between 3% and 5%. That’s largely ahead of expectations of 3.3% growth. For its current quarter, Abercrombie anticipates sales will rise between 3% and 5%, which is in line with expectations of 4.7% growth at the high end. The company expects its operating margin to be between 12% and 13%, lower than expectations of 14.1%. It anticipates earnings per share will be between $2.10 and $2.30, below expectations of $2.50.

Mitigating Tariff Impact

On a call with analysts, finance chief Robert Ball said Abercrombie expects a $70 million hit from tariffs, but will lower it to $50 million through mitigation. To offset the duties and maintain profits, the company is not planning "broad-based" price increases, but is working with its vendors to offset costs and looking to diversify its sourcing network. "The more diversified we get, the faster that we can be," Ball said. "We’re looking for expense reductions … across the business, but we’re doing that with a very clear eye to protecting long-term investments for the business, because we just see a ton of opportunity for these brands globally and longer term. So it’s a very cautious approach."

Brand Performance

Abercrombie sourced about 30% of its products from China before the pandemic, but that number is now in the low single digits, said Ball. Its biggest trading partners are now Vietnam, Cambodia, and India, which would all face tariffs between 26% and 49% under President Donald Trump’s April proposal. Abercrombie’s weak guidance largely reflects how tariffs will cut into its profits, but its sales are also expected to take a hit as it contends with a slowdown at its namesake banner. Abercrombie’s eponymous chain fueled its historic comeback over the last few years, but sales fell 4% at the brand in the first quarter, following 31% growth in the year-ago period. Meanwhile, comparable sales for the Abercrombie brand plunged 10%.

Future Plans

The company is also lapping the strong launch of its wedding shop in the year-ago period. The product launch included dresses and outfits for all of the occasions surrounding the modern-day wedding, such as the rehearsal dinner, the morning after brunch, and the bachelorette trip. To build on the success of wedding apparel, Abercrombie launched its vacation shop this year, which Horowitz expects will be a growth driver for the company. She expects the Abercrombie brand to return to growth in the back half of the year.

Conclusion

Abercrombie & Fitch’s performance and guidance reflect the challenges posed by tariffs and a slowdown in its namesake brand. However, the company’s efforts to diversify its sourcing network, mitigate tariff impacts, and drive growth through its Hollister brand and new product launches are expected to support its long-term prospects.

FAQs

Q: What is Abercrombie & Fitch’s revised profit outlook?
A: Abercrombie & Fitch is now expecting full-year earnings per share to be between $9.50 and $10.50, down from a previous range of between $10.40 and $11.40.
Q: How much is Abercrombie expecting to be hit by tariffs?
A: Abercrombie expects a $70 million hit from tariffs, but will lower it to $50 million through mitigation.
Q: What is driving Abercrombie’s growth?
A: Hollister brands led the performance with growth of 22%, achieving its best ever first quarter net sales.
Q: Is Abercrombie planning to increase prices due to tariffs?
A: The company is not planning "broad-based" price increases, but is working with its vendors to offset costs and looking to diversify its sourcing network.
Q: What are Abercrombie’s expectations for its current quarter?
A: Abercrombie anticipates sales will rise between 3% and 5%, and expects its operating margin to be between 12% and 13%.

Introduction to E.l.f. Beauty’s Acquisition of Rhode

Hailey Bieber attends the Rhode UK launch party with Hailey Bieber at Chiltern Firehouse on May 17, 2023 in London, England. E.l.f. Beauty announced on Wednesday plans to acquire Hailey Bieber’s beauty brand Rhode in a deal worth up to $1 billion as the cosmetics company looks to expand further into skincare.

Details of the Acquisition

The acquisition – E.l.f.’s biggest ever, according to FactSet – is comprised of $800 million in cash and stock, plus an additional potential $200 million payout based on Rhode’s performance over the next three years. The deal is expected to close in the second quarter of the company’s fiscal 2026 — or later this year. "I’ve been in the consumer space 34 years, and I’ve been blown away by seeing this brand over time. In less than three years, they’ve gone from zero to $212 million in net sales, direct-to-consumer only, with only 10 products. I didn’t think that was possible," CEO Tarang Amin told CNBC in an interview. "So that level of disruption definitely caught our attention."

Hailey Bieber’s Statement

In a news release, Bieber said she’s excited to partner with E.l.f. to bring her brand to "more faces, places, and spaces." "From day one, my vision for rhode has been to make essential skin care and hybrid makeup you can use every day," said Bieber. "Just three years into this journey, our partnership with e.l.f. Beauty marks an incredible opportunity to elevate and accelerate our ability to reach more of our community with even more innovative products and widen our distribution globally."

E.l.f. Shares and Quarterly Results

E.l.f. shares dropped about 10% in extended trading after the company announced the acquisition and released results for its fiscal fourth quarter. The company topped Wall Street’s quarterly estimates, but did not offer guidance due to the Trump administration’s changing tariff policy. E.l.f. gets a disproportionate amount of its merchandise from China.

Why E.l.f. is Betting on Rhode

Launched in 2022, Rhode has more than doubled its customer base over the past year and generated $212 million in revenue in the 12 months ended March 31. The company’s growth has primarily come through its website, but it plans to launch in Sephora stores throughout North America and the U.K. before the end of the year. As part of the acquisition, Bieber will serve as Rhode’s chief creative officer and head of innovation, overseeing creative, product innovation and marketing.

E.l.f.’s Growth Strategy

Under her direction, Rhode last year became the No. 1 skincare brand in earned media value — or exposure through methods other than paid advertising — with 367% year-over-year growth. Rhode is a solid match for E.l.f., which has seen growth skyrocket in recent years in large part to its digital prowess. The company has legions of online fans and is known for TikTok marketing that feels more natural to consumers. The company is also looking to dig deeper into skincare, which has become more popular with all age groups, particularly E.l.f’s younger, core consumer.

E.l.f.’s Quarterly Performance

E.l.f. made the announcement as it posted fiscal fourth quarter results, which beat Wall Street’s expectations on the top and bottom lines. The company’s reported net income for the three-month period that ended March 31 was $28.3 million, or 49 cents per share, compared with $14.5 million, or 25 cents per share, a year earlier. Sales rose to $332.7 million, up about 4% from $321.1 million.

Conclusion

E.l.f. Beauty’s acquisition of Rhode is a strategic move to expand its presence in the skincare market. With Rhode’s impressive growth and Hailey Bieber’s influence, the partnership is expected to bring significant benefits to both companies. As E.l.f. continues to navigate the challenges of tariffs and global trade, its focus on digital marketing and skincare innovation is likely to drive future growth.

FAQs

Q: What is the value of the acquisition deal between E.l.f. Beauty and Rhode?
A: The acquisition deal is worth up to $1 billion, comprising $800 million in cash and stock, plus an additional potential $200 million payout based on Rhode’s performance over the next three years.
Q: Who will lead Rhode after the acquisition?
A: Hailey Bieber will serve as Rhode’s chief creative officer and head of innovation, overseeing creative, product innovation, and marketing.
Q: What is the expected impact of the acquisition on E.l.f.’s business?
A: The acquisition is expected to drive growth for E.l.f. in the skincare market, particularly among younger consumers, and expand its digital presence.
Q: How did E.l.f. perform in its fiscal fourth quarter?
A: E.l.f. beat Wall Street’s expectations on the top and bottom lines, with net income of $28.3 million, or 49 cents per share, and sales of $332.7 million, up 4% from the previous year.