Retailers Costco And Gap Warn Consumers Of Higher Prices

Costco is warning about cautious customers due to higher prices and the potential effects of tariffs as the warehouse retailer reports mixed second-quarter results.

Gap exceeded expectations amid a “reinvigoration” of its brands. I Photo: Kakidai Wikimedia Commons

Executives used the term “choiceful” to describe what they expect from shoppers as tariffs raise prices, Sabrina Escobar and Liz Moyer reported for Barron’s Daily.

The remarks echo comments earlier this week by Target CEO Brian Cornell. However, Costco may have an advantage over competitors in navigating a more inflationary environment: membership fees account for a significant portion of its operating profits.

Costco reported earnings of $4.02 per share for the February quarter, with revenue reaching $63.7 billion. Same-store sales rose 6.8%, surpassing expectations. CEO Ron Vachris noted that it is difficult to predict how tariffs will impact business.

Approximately one-third of Costco’s U.S. sales come from imports, with less than half of those items originating from China, Mexico, and Canada, he added.

The Trump administration has paused some tariffs on goods from Mexico and Canada until April.

Another retailer, Gap, exceeded expectations amid a “reinvigoration” of its brands. Its sales forecast for the year surpassed expectations despite the potential impact of tariffs. Its Old Navy, Banana Republic, and Gap brands all reported quarterly same-store sales increases.