Costco announced on Thursday that it received $184 million in tariff refunds during its fourth quarter, with most of that money being reinvested to lower prices for its warehouse members.
The large retailer indicated that these refunds helped reduce prices on a variety of everyday products, which include food, beverages, and other categories.
During a conference call regarding the company’s earnings, Costco CEO Ron Vachris mentioned, “We received some initial tariff refunds in the fourth quarter, and we reinvested some of these dollars to give value back to our members.”
He explained that this was largely achieved through price cuts on numerous items in the latter half of the quarter, specifically on everyday products like produce, meat, and beverages, along with some non-food goods such as home furnishings and hardware.
Costco CFO Gary Millerchip noted that the company sees these pricing adjustments as a way to give back value to members based on the tariff refunds received.
“Our aim was to ensure these savings affected items that would benefit members the most. A significant number of everyday items were impacted,” he said.
He also added that they allocated some funds toward non-food areas that were affected by tariffs when they were first implemented.
Millerchip elaborated that the $184 million in tariff refunds comprised $174 million in refunds and $10 million in interest. This figure accounts for just over one-third of the total refunds Costco anticipates receiving, indicating that a strong amount had already come in during the first quarter.
“We plan to keep reinvesting most of the money we receive to enhance member values. Since tariff refunds and their reinvestments are not regular occurrences, we will keep informing about their net impact during future quarterly earnings calls,” Millerchip stated.
Regarding the effects of tariffs on product offerings last year, Vachris shared that the company had to pull some items from shelves and substitute them with different SKUs. He noted that the most significant effects were felt in the first two quarters, tapering off somewhat in the third quarter as things started to normalize a bit.
