A lot of Costco’s growth is coming from members who don’t have room for a pallet of paper towels.

Net sales rose 11.2% last quarter to $93.9B, and paid members reached 84.1M, up 3.8%, according to the release. On the earnings call, CEO Ron Vachris said members under 40 have grown nearly 60% since COVID and now make up more than a quarter of the base. He didn’t give a count. A quarter of 84.1M is about 21M memberships. That’s my math, though, and it depends on how Costco decides whose age counts on a household card.

Many of these members order on their phones. Costco says orders placed through its delivery marketplaces arrive in under an hour on average and are mostly incremental to the warehouse grocery business. I’d want to see the data on that before I believed it. Costco is the only one measuring it, and it pays the delivery partners whether those sales are new or not.

Digitally enabled comparable sales grew 19.5% in the quarter, roughly twice the 9.4% growth in total comps.

I’m a member as of recently, and the first thing I bought was a mattress. Jess, my co-host, isn’t a member because she has nowhere to store bulk paper towels.

Younger members spend less at first, so the case for chasing them rests on the membership model. There are 42.3M executive members, and they account for 75.6% of sales. Membership fee income was $1.85B in the quarter, against $1.72B a year earlier. The US and Canada renewal rate was 92.3%, up 10 basis points from the prior quarter and level with a year ago. Costco expects the under-40 group to trade up to executive over time and keep renewing.

Costco received $184M in IEEPA tariff refunds in the quarter, about a third of what it expects in total. The release says the refunds added 15 cents a share to earnings after Costco put part of the money back into prices. Kirkland Colombian coffee went from $21.99 to $19.99, and Kirkland pepper went from $6.99 to $5.99. Reported EPS was $6.75, up 15% from $5.87. Without the 15 cents, EPS was $6.60, up about 12% on my math.

An Illinois member has filed a proposed class action arguing that the refunds belong to the shoppers who paid the higher prices. Since March, Costco has said it will return the value through lower prices and better values. The complaint says general price cuts don’t count as a refund to the specific people who paid more.

I think Costco’s approach is defensible. Most of the people who paid tariff-inflated prices are still shopping there and will get the lower prices. Jess thinks shareholders were paid first. The 15-cent benefit is already in reported earnings, and no court has ruled on whether the class can go ahead.

Costco says a similar amount of refunds arrived early in the new quarter, and it expects more after that. The release didn’t break out how much of the Q4 money went to prices and how much went to earnings.

Walmart is automating most of its roughly 200 U.S. supply-chain buildings while they keep shipping to stores. The WSJ says about 80% of the projects are retrofits of warehouses built in the 1980s and ’90s. Walmart’s head of supply-chain operations told the paper the company is at its most complicated stage.

Walmart says more than 65% of its stores now get some automated freight. Kroger closed three automated fulfillment centers last fall and took a $2.6B charge. Walmart expects automation spending to peak this year and next, and nobody has said when it pays back.