Net sales of $93.87 billion missed the $94.97 billion estimate by 1.2%, even though sales rose 11.2% from $84.43 billion and gas price inflation added roughly 3 points to the comparable sales line.
EPS of $6.75 beat the $6.54 estimate by $0.21, on net income of $2.998 billion, but $0.15 per diluted share of that came from non-recurring IEPA tariff refunds received in the quarter.
The only forward numbers are spending: fiscal 2027 capital expenditure of approximately $7.5 billion against $6.4 billion spent in fiscal 2026, and 33 warehouse openings of which 5 are relocations.
The call added one thing of substance: a similar amount of tariff refunds has already been received in the first quarter of fiscal 2027, and management intends to keep reinvesting the majority in lower prices.
The one thing that matters: $0.15 of the $0.21 EPS upside is a non-recurring refund and the top line missed with a gas tailwind, while Q4 was the last quarter carrying a year-over-year membership fee increase benefit and paid members grew only 3.8%.
Guidance & KPIs
Item
New guidance
Prior guidance
Capital expenditure, fiscal year 2027
approximately $7.5 billion
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Warehouse openings, fiscal year 2027
33 warehouses, of which 5 are relocations
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Management commentary
Tariff refunds of $184 million, made up of $174 million of refunds and $10 million of interest, are a little more than one-third of the total expected; management plans to keep reinvesting the majority in member value and to quantify the net impact each quarter.
On slowing membership growth, management pointed to 42.3 million paid executive members, up 9.4%, record executive penetration and a US and Canada renewal rate of 92.3%, up 10 basis points, as the quality offset to 3.8% paid member growth.
Asked to square low single digit inflation with the LIFO charge, management explained the fourth-quarter true-up: "while we took a $150 million or so charge in the fourth quarter, if you look at the total charge for LIFO for the year, it is slightly north of $200 million".
The step-up to approximately $7.5 billion of fiscal 2027 capital expenditure supports a run rate of 30 net new warehouses a year; management expects the rate of capital expenditure growth to slow beyond fiscal 2027.
On costs, management named general liability and healthcare as the faster-growing SG&A buckets, and said employee agreements are now in year two of a three-year cycle in which year one is the most expensive.
Quality of earnings
The earnings beat is non-recurring, not operational. EPS of $6.75 against a $6.54 estimate includes a $0.15 per diluted share benefit from $184 million of IEPA tariff refunds and interest received in the quarter, partly reinvested in price.
Gross margin fell and SG&A carried the quarter. The gross margin rate was 11.02% against 11.13%, 11 basis points lower, with a $152 million LIFO charge versus $43 million a year ago; SG&A of 8.94% against 9.21% supplied a 27 basis point offset.
Membership fee income growth gets harder from here. Fee income of $1.849 billion rose 7.3%, but Q4 is the last quarter with a year-over-year benefit from the September 2024 fee increase, leaving 3.8% paid member growth and executive mix to carry it.
Gotchas & watch items
Headline growth flatters the volume story: comparable sales were up 9.4% with gas price inflation contributing approximately 3%, and only 6.7% excluding gas and FX.
The $152 million LIFO charge is a full-year true-up landed in one quarter; management put the full-year charge slightly north of $200 million, about 1.5% inflation on US inventory on hand.
Reported core margin was 32 basis points lower on mix, as gas, e-commerce and pharmacy grew faster than core merchandise; core-on-core margin was 18 basis points higher excluding the tariff refund effects.
Refunds received are a little more than one-third of the total expected, with a similar amount already in hand in the first quarter of fiscal 2027, so the non-recurring benefit and its reinvestment distort fiscal 2027 comparisons too.