Costco Wholesale's (COST -1.04%) final sales update of its fiscal 2026 (which ended Aug. 30) shone a spotlight on a growth engine that is expanding much faster than the overall business. The company's digitally enabled comparable sales (sales initiated through a digital device and fulfilled through a warehouse or distribution center, as well as Costco Travel) rose by 20.9% year over year, more than twice the company's 8.4% total comparable-sales growth.
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Digitally enabled sales surpassed $27 billion and accounted for nearly 10% of Costco's total net sales in its fiscal 2025. Hence, the business has become large enough to influence companywide growth.
Strengthening Costco's membership model
Costco is not trying to replace its warehouses with a digital business. Instead, digital tools are giving members more ways to discover its products and shop for them.
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Key Data Points
The company's personalization efforts could make these digital interactions more valuable. In the third quarter of its fiscal 2026, personalized recommendation carousels on its online platforms converted at roughly three times Costco's typical digital rate and generated just under $500 million of e-commerce sales.
However, rapid digital growth does not automatically translate into equally strong profit growth. Costco says its digitally enabled business carries a lower gross margin than its warehouse operations. Hence, the value of the opportunity depends on whether higher engagement and improved convenience can offset the impact of that lower-margin mix.
September 2026 will be crucial
The company's digital momentum remained strong late in the fiscal year. Digitally enabled comparable sales rose 19.5% year-over-year in fiscal 2026 Q4 and 17.9% year-over-year in August 2026. However, both were lower than the digital growth rate for the fiscal year as a whole.
The stock's valuation could also prove challenging for investors. Costco is currently trading at roughly 40.8 times Wall Street's fiscal 2027 consensus earnings estimate of $22.7 per share (as of Sep. 3, 2026). Its digital growth alone cannot justify such a premium valuation.
Costco is scheduled to report its fiscal fourth-quarter earnings results on Sept. 24. The more important question that report may answer is whether rapid digital growth is also strengthening member economics and overall profitability. If Costco can keep growing the digital business at the 15% to 20% pace it has been achieving recently while preserving those metrics, it could become a meaningful growth driver in the coming years.
