Costco's Warehouse Expansion Plans Signal Long-Term Growth Engine
Costco Wholesale Corporation's COST warehouse expansion strategy remains a key part of its long-term growth plan. The company aims to open 28 new warehouses in fiscal 2026 and targets more than 30 openings annually in the coming years. This shows a strong commitment to ongoing physical expansion, emphasizing the company’s reliance on its warehouse model as the main driver of member engagement and sales growth.
In the second quarter of fiscal 2026, Costco opened four warehouses, including a U.S. relocation, one new U.S. location and two Canadian business centers, increasing its global total to 924 warehouses. Costco plans to open 18 more locations this fiscal year, reaching a total of 942 warehouses by year-end. Of these 18 locations, about 15 will be in the United States, one in Canada and two in international markets.
Importantly, the company is evolving its real estate playbook. To support growth, the company expects to spend roughly $6.5 billion on capital expenditures this year. These investments are specifically earmarked for building new warehouses, expanding depots and remodeling existing warehouses to drive further traffic.
Beyond expanding its footprint, new warehouses are designed to enhance productivity and relieve pressure on high-volume locations. This expansion also aims to boost shopping frequency, which management sees as a key driver in mature markets.
What the Latest Metrics Say About Costco
Costco, which competes with Dollar General Corporation DG and Target Corporation TGT, has seen its shares rise 4% in the past year against the industry’s growth of 16.4%. While shares of Dollar General have surged 33.3%, those of Target have jumped 14.8% in the aforementioned period.
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From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 45.82, higher than the industry’s ratio of 32.21. COST carries a Value Score of D. Costco is trading at a premium to Target (with a forward 12-month P/E ratio of 14.77) and Dollar General (15.85).
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The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 8.3% and 13%, respectively. For the next fiscal year, the consensus estimate indicates a 7.3% rise in sales and 9.8% growth in earnings.
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Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).
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