Shares of Costco experienced a slight dip on Thursday, even after the company reported fiscal third-quarter earnings and revenue that exceeded expectations, with an 8% year-over-year increase in sales.

While many retailers provide annual financial forecasts, Costco does not. However, during an earnings call, company executives discussed the challenges and increased expenses resulting from tariffs.

Here’s a summary of the company’s performance in its fiscal third quarter,as compared to LSEG analyst predictions:

• Earnings per share: $4.28 vs. $4.24 expected
• Revenue: $63.21 billion vs. $63.19 billion expected

For the three-month period ending May 11,Costco reported net income of $1.90 billion, or $4.28 per share, up from $1.68 billion, or $3.78 per share,in the same period last year. Revenue increased from $58.52 billion year-over-year.

Comparable sales, which exclude the impact of new store openings and closures, increased by 8%. E-commerce sales also saw a rise of nearly 16% compared to the previous year, excluding gas and foreign exchange fluctuations.

As tariffs contribute to economic uncertainty and possibly higher consumer prices, Costco is positioned to potentially benefit. The company’s reputation for competitive pricing and bulk discounts, along with discounted gas and groceries, could attract more customers and encourage membership renewals.Furthermore, its notable size gives it greater leverage in price negotiations with suppliers compared to some other retailers.

According to CFO Gary Millerchip, about one-third of Costco‘s U.S. sales come from goods imported from other countries, with items from China accounting for approximately 8% of total U.S. sales.

Retailers Respond to Tariff Pressures

“we felt it was vital to to realy eliminate the impact there for the member by working with our suppliers and by us finding efficiencies and accepting that there may be a margin impact.”

Several retailers have already indicated that increased tariffs will lead to higher prices. Best Buy CEO Corie Barry stated that the retailer has already increased prices on some consumer electronics due to tariffs. Similarly, cosmetics company E.l.f. Beauty recently announced a price increase on its makeup. Walmart CFO John David Rainey also cautioned that higher prices were expected in late May or June.

In response, Costco CEO Ron Vachris stated that the company has been actively seeking ways to minimize tariff costs while maintaining low prices. Strategies include expediting orders to arrive in the U.S. before tariffs take effect, rerouting goods from countries with higher tariffs to other markets, and increasing sourcing for its private brand, Kirkland Signature, within the regions where the items are sold.

Vachris noted that Costco has even lowered prices on certain items, such as eggs, butter, and olive oil, despite the tariff surroundings. The company is also focusing on enhancing the value proposition for its members, such as extending the hours of its discounted fuel stations.

Millerchip explained that Costco‘s strategy of offering a narrower selection of items, like fewer brands of peanut butter or diapers, allows it to be a larger buyer and collaborate more effectively with suppliers on pricing. The company can also shift to alternative items if necessary.

According to Millerchip, Costco has absorbed tariff-related cost increases