Costco Wholesale Corp (NASDAQ: COST) is a membership warehouse club retailer that operates physical warehouses and e-commerce sites selling a limited selection of nationally-branded and private-label products across a wide range of categories at low prices. Revenue comes from two sources: merchandise sales across core categories (foods and sundries, non-foods, and fresh foods), warehouse ancillary services (gasoline, pharmacy, optical, food court, hearing aids, and tire installation), and other businesses (e-commerce, business centers, travel), plus annual membership fees. U.S. and Canadian operations combined for 86% of net sales and 84% of operating income in FY2025, with California alone representing 26% of U.S. net sales. Costco competes in the warehouse club format against Sam's Club and BJ's Wholesale Club, and more broadly against Walmart, Target, Kroger, and Amazon. The company opened 27 new warehouses in FY2025, including three relocations, for a net addition of 24 locations. Ron Vachris has served as President and CEO since December 2023.

Revenue model

Dual revenue streams: merchandise sales (transactional, at low gross margins enabled by high volume and rapid inventory turnover) and annual membership fees. Executive membership carries a 2% reward on purchases that reduces net sales. Membership renewal rates and Executive membership penetration are disclosed as material drivers of profitability. Total revenue from U.S. and Canadian operations was $200,046 million and $36,923 million, respectively, for the fiscal year ended August 31, 2025.

Products and services

Core merchandise categories: foods and sundries, non-foods, and fresh foods. Warehouse ancillary: gasoline, pharmacy, optical, food court, hearing aids, and tire installation. Other businesses: e-commerce, business centers, and travel. Products include nationally-branded and private-label items sold in a limited SKU, high-volume format. Average warehouse is approximately 147,000 square feet.

Customers and end markets

Individual consumers and businesses who pay annual membership fees to access warehouse pricing. Two membership tiers disclosed: standard and Executive. Membership loyalty, renewal rates, and shopping frequency are cited as primary profitability drivers. No single customer concentration disclosed.

Value-chain role

Retailer and direct buyer from suppliers. Merchandise is routed through cross-docking consolidation depots or shipped directly to warehouses, bypassing traditional multi-step distribution. E-commerce orders fulfill through depots, logistics operations, and drop-ship arrangements. Costco often sells inventory before payment is due, generating a working capital benefit.

Geographic exposure

U.S. operations: 86% of net sales and 84% of operating income in FY2025. California alone: 26% of U.S. net sales in FY2025. Canadian segment: disclosed separately, with two net new warehouses opened in FY2025. Other International segment: seven net new warehouses opened in FY2025. Total revenue from the U.S. was $200,046 million and from Canada was $36,923 million for the fiscal year ended August 31, 2025.

Competitors

Sam's Club (Walmart), BJ's Wholesale Club, Walmart, Target, Kroger, Amazon

Source: SEC 10-K, filed 2025-10-08

Industry: Retail-Variety Stores Peers: BJ's Wholesale Club Holdings Inc PriceSmart Inc Walmart Inc