Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Costco (NASDAQ: COST) and the best and worst performers in the non-discretionary retail industry.

Food is non-discretionary because it's essential for life (maybe not those Oreos?), so consumers naturally need a place to buy it. Selling food is a notoriously tough business, however, as the costs of procuring and transporting oftentimes perishable products and operating stores fit to sell those products can be high. Competition is also fierce because the alternatives are numerous. While online competition threatens all of retail, grocery is one of the least penetrated because of the nature of the product. Still, we could be one startup or innovation away from a paradigm shift.

The 4 non-discretionary retail stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 1.1%.

While some non-discretionary retail stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 1.4% since the latest earnings results.

Costco (NASDAQ: COST)

Designed to be a one-stop shop for the suburban consumer, Costco (NASDAQ: COST) is a membership-only retail chain that sells groceries, apparel, toys, and household items, often in bulk quantities.

Costco reported revenues of $70.53 billion, up 11.6% year on year. This print exceeded analysts’ expectations by 1.5%. Overall, it was a strong quarter for the company with a solid beat of analysts’ gross margin estimates.

Costco achieved the fastest revenue growth of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 3.5% since reporting and currently trades at $960.76.

We think Costco is a good business, but is it a buy today? Read our full report here, it’s free.

Best Q2: Grocery Outlet (NASDAQ: GO)

Due to its differentiated procurement and buying approach, Grocery Outlet (NASDAQ: GO) is a discount grocery store chain that offers substantial discounts on name-brand products.

Grocery Outlet reported revenues of $1.19 billion, up 1.1% year on year, outperforming analysts’ expectations by 2.1%. The business had an exceptional quarter with a beat of analysts’ EPS and EBITDA estimates.

Grocery Outlet delivered the biggest analyst estimate beat among its peers. The market seems happy with the results as the stock is up 6.9% since reporting. It currently trades at $10.95.

Is now the time to buy Grocery Outlet? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Albertsons (NYSE: ACI)

With over 20 well-known grocery banners spanning 34 states, Albertsons (NYSE: ACI) operates food and drug retail stores across the US, offering groceries, pharmacy services, and own-brand products under banners like Safeway, Jewel-Osco, and Vons.

Albertsons reported revenues of $24.94 billion, flat year on year, exceeding analysts’ expectations by 0.6%. Still, it was a softer quarter as it posted full-year EBITDA guidance missing analysts’ expectations and a significant miss of analysts’ EBITDA estimates.

Albertsons delivered the slowest revenue growth in the group. As expected, the stock is down 14.4% since the results and currently trades at $12.50.

Read our full analysis of Albertsons’s results here.

Sprouts (NASDAQ: SFM)

Playing on the secular trend of healthier living, Sprouts Farmers Market (NASDAQ: SFM) is a grocery store chain emphasizing natural and organic products.

Sprouts reported revenues of $2.33 billion, up 4.7% year on year. This number was in line with analysts’ expectations. More broadly, it was a slower quarter as it recorded EPS guidance for next quarter missing analysts’ expectations significantly and full-year EPS guidance missing analysts’ expectations.

Sprouts had the weakest performance against analyst estimates among its peers. The stock is up 5.2% since reporting and currently trades at $83.30.

Read our full, actionable report on Sprouts here, it’s free.

Market Update

Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership.

Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products.

By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals.

Want to invest in winners with rock-solid fundamentals? Check out our Hidden Gem Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.