Costco Wholesale’s Chief Financial Officer, Gary Millerchip, emphasized the enduring importance of the company’s $1.50 hot dog and soda combo during a recent earnings call, describing it as a cornerstone of the retailer’s value proposition, especially amid uncertain economic conditions. n nHe highlighted that investments in manufacturing infrastructure to increase hot dog output, along with a new coffee roasting facility, contributed to higher capital expenditures. For the fiscal year 2025, which ended August 31, capex reached nearly $5.5 billion—up from $4.7 billion the previous year—driven by plans for 35 new store openings in fiscal 2026, accelerated remodeling efforts, and land acquisitions for future expansion. n nMillerchip noted that while members enjoy the novelty of limited-time finds, everyday essentials remain crucial, particularly when financial pressures mount. He cited the hot dog combo, rotisserie chicken, and Kirkland Signature bath tissue as prime examples of consistent value. In fiscal 2025, Costco sold more than 245 million hot dog combos and over 157 million rotisserie chickens. The volume of toilet paper sold was so vast it could stretch to the moon and back more than 200 times. n nThe company reported fourth-quarter net sales of $84.4 billion, an 8% increase from $78.2 billion in the same period the prior year. Looking ahead, Millerchip anticipates capital spending will continue to rise in 2026, likely outpacing sales growth, mirroring the trend seen in the previous fiscal year. n nRegarding tariffs, Millerchip indicated that while future changes remain possible, Costco has managed current impacts effectively. The company avoided sudden disruptions by advancing purchases of seasonal goods, shifting supply chains away from high-tariff regions, and increasing production of its private-label Kirkland Signature items in markets where they are sold. These strategies have allowed the business to navigate trade policy shifts without significant financial strain. n nCostco’s approach reflects broader corporate sentiment: recent data from the Business Roundtable shows growing optimism among CEOs, with increased plans for investment and expectations of higher sales in the coming months.
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Costco CFO calls hot dog combo important amid ‘economic uncertainty’
Dive Brief: n nCostco Wholesale CFO Gary Millerchip said on an earnings call Thursday that the company’s popular $1.50 hot dog and soda combo remained one of the company’s key products, noting that the company’s investments in its manufacturing facilities that will expand hot dog production as well as a new coffee roasting facility contributed to the company’s higher spending. n nThe Issaquah, Washington-based company’s capital expenditures increased to “a little under” $5.5 billion for the fiscal year 2025 ended Aug. 31, as Costco made additional investments to support growth including 35 planned openings in fiscal 2026, increased the pace of its spending on remodels, and purchased land for future expansions, Millerchip said on the call, according to a transcript. The capex is up from $4.7 billion in fiscal 2024, according to the company’s 10-K filing. n n“While our members love the treasure hunt items that they find in our warehouses and online, our everyday value items are also extremely important to them, especially in times of economic uncertainty,” said Millerchip, who also noted the company recently celebrated the 40th anniversary of its hot dog and soda offering. “There are no better examples of this than our hot dog combo, rotisserie chicken and KS bath tissue. And in fiscal year 2025, we sold over 245 million hot dog combos, over 157 million rotisserie chickens and enough bath tissue to reach the moon and back over 200 times.” n nDive Insight: n nCostco, which seeks to continue to invest in growth while navigating tariff impacts, inflation and potential changes in consumer spending, reported net sales for Q4 increased 8% to $84.4 billion from $78.2 billion in the year-earlier period. Looking ahead, Millerchip said the company’s capex will likely rise year-over-year again, though he declined to give specific numbers. n n“We’d expect 2026 to have capital expenditure that would grow over 2025 and probably a little bit higher than sales again for the same reasons in ’26 as ’25,” Millerchip said during the call. Costco isn’t the only company that is positioning itself to boost investment: The Business Roundtable said CEO sentiment brightened this month on an increase in plans for capital investment and expectations for higher sales during the next six months, CFO Dive previously reported. n nOn Thursday in an answer to an analyst’s question on the company’s tariff outlook, Millerchip described some of the steps the company has taken and suggested the company was satisfied with its approach, although he said there may still be changes to tariffs to come. n n“From what we know today, we feel like there wasn’t, like, a cliff for us,” Millerchip said. “The impact was managed gradually by our teams doing all the things that we’ve mentioned, and we largely feel like we’ve worked through the strategies that we needed to mitigate what we see in front of us today.” n nCostco’s tariff mitigation strategies have included pulling forward purchases of sporting goods and summer-related items ahead of the levies, rerouting goods sourced from countries with “large tariff exposure,” and buying more of its store brand Kirkland Signature product in countries or regions where the items are sold, executives said in May.