Costco Wholesale Corporation
Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. It offers merchandise, including sundries, dry groceries, candies, coolers, freezers, deli, liquor, and tobacco; non-food merchandise comprising appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosks, and jewelry; and fresh food, such as meat, produce, service deli, and bakery products. The company is also involved in warehouse ancillary operations, which include gasoline, pharmacies, optical, food courts, hearing-aid centers, and tire installation centers. In addition, it engages in e-commerce, business centers, travel, and other businesses. The company was formerly known as Costco Companies, Inc. and changed its name to Costco Wholesale Corporation in August 1999. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.
What does it do?
Costco runs giant warehouse stores where you pay an annual fee — like a membership — just to shop there. Once inside, you find everything from giant tubs of peanut butter to TVs to caskets, all sold at prices that are hard to beat anywhere else. The twist is that Costco deliberately keeps its profit margins razor thin on products, passing the savings to members. Think of it less like a store and more like a club that charges you to save money.
In an era where consumers are squeezed by inflation and increasingly price-conscious, Costco's bulk-discount model looks more attractive than ever — members actively seek it out rather than being lured by sales. With a market cap of $436 billion, it's one of the most valuable retailers on the planet, and investors treat it almost like a blue-chip staple, not just a retailer. Its consistent ability to grow revenue — from $254.5B to $275.2B in one year — while others in retail struggle makes it a benchmark company right now.
How does it make money?
Costco makes money in two distinct ways, which is what makes it unusual. First, it sells merchandise across its warehouses globally, generating the bulk of its $275.2 billion in revenue. Second — and more importantly for investors — it charges members an annual fee (roughly $65–$130 depending on the tier) just to walk through the door, and this membership fee revenue flows almost entirely to the bottom line as pure profit. Net income came in at $8.1 billion, and a significant chunk of that is driven by those membership fees rather than product markups, which means the business model is unusually predictable and sticky.
Why do investors care?
Investors love Costco because its members renew at rates above 90%, meaning the revenue base is extraordinarily reliable year after year — that's the kind of loyalty most companies can only dream of. The growth story is international expansion: Costco is still relatively underpenetrated in markets like China, Spain, and Scandinavia, giving it a long runway to open new warehouses. For the thesis to work, Costco needs to keep adding members, keep those renewal rates high, and successfully transplant its model into new countries. If consumer spending weakens sharply, Costco historically benefits as shoppers trade down to bulk buying — making it defensive in downturns too.
Deep Dive
MemberA full investor briefing on Costco Wholesale Corporation — history, leadership, risks, and outlook.