Costco (NASDAQ: COST) stock declined about 5% during trading on July 9. Since reaching a record high in mid-May, COST has fallen approximately 17%. The decline was triggered by Costco releasing June sales data that fell short of Wall Street expectations: net sales grew 10.6%, the slowest pace since February; same-store sales increased 8.8%, significantly slower than the 12.5% in May.
June Sales Data: Net Sales Up 10.6%, Same-Store Sales Up 8.8%
According to data released by Costco on Wednesday evening, net sales in June increased 10.6%, the slowest growth since February 2026, and the first month this year to show a slowdown in month-over-month growth. In the previous months of 2026, Costco's sales growth had been accelerating month by month, rising from about 9% in January to over 14% in May.
June same-store sales grew 8.8%, a clear slowdown from 12.5% in May. For a nationwide retailer with annual sales of $250 billion, an 8.8% growth rate remains rapid, but the deceleration trend has prompted the market to reassess its high valuation.
Valuation Pressure at a P/E of 46: Wells Fargo's "Little Tolerance" Comment and Industry Comparison
Reportedly, Costco's current P/E ratio is 46, one of the highest among S&P 500 retail companies. In comparison, Walmart (WMT) has a P/E of 39, and BJ's Wholesale (BJ) has a P/E of 20. Costco's valuation premium is quite significant.
Wells Fargo analyst Edward Kelly stated in a report on July 8: "Costco is performing strongly in the current turbulent market, but there is a risk of slowing growth, and with the current P/E ratio, there is little room for error."
He also summarized the retailer's "solid" sales performance in June, but the high valuation means investors have higher expectations for every data point. If the data falls short, it could trigger a substantial stock correction.
Frequently Asked Questions
What is the direct reason for Costco's stock dropping on Thursday?
According to reports, the immediate cause was Costco's June sales data released Wednesday evening, which fell short of Wall Street's high expectations: net sales grew 10.6% (the slowest since February 2026), and same-store sales increased 8.8% (significantly slower than 12.5% in May). Coupled with a P/E ratio of 46, the market was particularly sensitive to the slowdown, leading to a roughly 5% decline in the stock price that day.
Is Costco's P/E ratio of 46 high compared to industry peers?
Reportedly, Costco's P/E of 46 is among the highest in the S&P 500 retail sector; Walmart (WMT) has a P/E of about 39, and BJ's Wholesale (BJ) about 20. Wells Fargo analyst Edward Kelly commented that a high P/E means "little room for error," and any slowdown could trigger a larger stock reaction. This is the analyst's personal view and does not constitute investment advice.
How has Costco's stock performed year-to-date?
According to reports, Costco's stock has increased approximately 6% since the start of 2026, but has fallen about 17% since reaching its record high in mid-May. The strong start to the year was partly driven by rising oil prices during the US-Iran conflict, boosting gas station sales, and consumers shifting toward Costco for value. The current stock price is based on market quotes.
