Jim Cramer expressed serious doubts about Costco’s trajectory on Thursday, stating that “something’s wrong” at the retail giant. He indicated he intends to investigate the issue further before deciding whether to maintain his position in the warehouse club’s shares.
The catalyst for Cramer’s skepticism is Costco’s August same-store sales report, which came in slightly above expectations but failed to demonstrate the flawless execution required to justify the stock’s current price-to-earnings ratio of approximately 41 times forward earnings. The retailer reported a 5.4% increase in comp sales for the four weeks ending August 30, excluding gasoline and foreign exchange impacts. When adjusted for the calendar shift of Labor Day, Wells Fargo analysts noted that sales likely rose 6.2%, just barely beating the consensus estimate of 6.1%.
Despite the modest beat, underlying metrics raised flags. Customer traffic decelerated by 110 basis points, falling below the trailing 12-month average. For Cramer, these results suggest that “peeking” past expectations is insufficient given the stock’s premium valuation.
The central concern revolves around membership retention, particularly among younger demographics. Cramer highlighted that while Costco generates the bulk of its operating income from reliable membership fees, the company is struggling to convert online sign-ups into long-term renewals. He warned, “You’re not getting the younger people to re-up,” adding that losing touch with younger shoppers would be disastrous for the brand.
Costco shares traded flat on Thursday at $929, reflecting a 15% decline from their all-time high of nearly $1,097 set in May. Although the stock remains up about 8% year-to-date, it has underperformed since the start of 2026, mirroring a volatile pattern from the previous year. Analysts suggest the company may be a victim of its own success, as sustaining mid-to-high single-digit growth rates becomes increasingly difficult after years of expansion.
Cramer emphasized that he refuses to passively accept losses, stating, “I’m not just going to sit here and just say, ‘Let’s take a beating.'” With the August report closing the fiscal year 2026 book, the upcoming earnings release will provide clearer insight into how management plans to address the membership renewal gap. Cramer’s charitable trust currently holds a long position in Costco stock.
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