Reported profits from big-box retailer Costco missed Wall Street's expectations, as tariffs and other macroeconomic uncertainties loom over the industry. 

The company’s earnings of $4.02 per share during the fiscal quarter that ended February 16 missed the average estimate of $4.11 compiled by Bloomberg. Higher supply chain costs weighed on costs during the period. Costco’s shares fell 7% midday on March 7, following the company’s quarterly report.  

Retailers have taken a more cautious outlook in recent weeks. Target said that some goods like fresh produce could get more expensive soon due to tariffs, while cautioning it’s too early to predict when prices would change at its own stores. Home Depot and Lowe’s said that they’re not anticipating a notable shift with interest rates or the broader housing market. 

In an interview on March 7, Costco’s chief financial officer Gary Millerchip said Costco’s goal is to minimize the impact of tariffs on consumers, and that the company is working with suppliers to identify areas to lower costs. Since the first round of China tariffs, Costco has shifted more product sourcing to other countries like Vietnam, he added. 

“The picture does change and therefore you have to make sure that you’re adopting plans,” Millerchip said.

Costco has been purchasing and storing more inventory in recent years due to supply chain constraints, Millerchip said. That’s pushed up Costco’s costs, he said, though having extra orders will help the retailer respond to tariffs. 

Consumers are willing to spend but they’re being “choiceful” about what they buy, Chief Executive Officer Ron Vachris said on a call with analysts on March 6. Shoppers could become even more selective, as some items such as meat get more expensive and tariffs potentially affect prices. U.S. consumer confidence declined in February by the most since August 2021, over concerns about inflation, tariffs and employment. 

Vachris said it’s difficult to predict the impact of tariffs. A third of Costco’s U.S. sales are imported from other countries, and less than half of these items are from China, Mexico and Canada. 

There continues to be a bifurcation in fresh food spending, he added, where people are buying both premium meat items and less expensive cuts.