Costco Wholesale Corporation (NASDAQ: COST): Corporate Profile & Financials

Source: Costco Wholesale Corporation Form 10-K 2026

Company Snapshot

🏢 The Corporate Identity: Who They Are & Where They Came From

The Big Picture

Costco Wholesale Corporation and its subsidiaries (collectively “Costco” or the “Company”) operate an international chain of membership warehouses and e-commerce websites designed to deliver low prices on a curated selection of nationally branded and private-label products across multiple merchandise categories. Founded on the core retail premise that high sales volumes and rapid inventory turns offset lower gross profit margins, the Company purchases directly from manufacturers and routes products through centralized cross-docking consolidation depots or directly to self-service, no-frills warehouse facilities. This streamlined distribution pipeline enables Costco to frequently sell inventory before payment to vendors is due, allowing the enterprise to capture early payment discounts and operate profitably on gross margins significantly below those of traditional retailers, supermarkets, discounters, and specialty stores.

Costco operates on a 52/53-week fiscal year ending on the Sunday closest to August 31. The 2026 fiscal year comprised the 52-week period ended August 30, 2026. The Company’s common stock is listed on The NASDAQ Global Select Market under the ticker symbol “COST.” At the close of fiscal 2026, Costco operated 939 membership warehouses worldwide, spanning 15 countries and territories, complemented by localized e-commerce sites in the U.S., Canada, Mexico, the United Kingdom, Korea, Taiwan, Japan, Australia, and China.

• Worldwide Warehouse Footprint: Costco operated 939 membership warehouses worldwide as of August 30, 2026, compared to 914 in fiscal 2025 and 890 in fiscal 2024.
• Substantial Membership Base: Reached 84,100,000 paid members and 66,300,000 secondary household cardholders, bringing total active cardholders to 150,400,000.
• Executive Membership Power: Executive memberships expanded to 42,300,000 paid accounts, representing 50.3% of total paid members and generating approximately 75.2% of worldwide net sales in fiscal 2026.
• Strong Member Retention: Recorded a trailing member renewal rate of 92.3% in the U.S. and Canada and 89.8% on a global basis at fiscal year-end 2026.

The Founders & Their Legacy

Costco Wholesale Corporation began operations in 1983 in Seattle, Washington, establishing its initial warehouse facility under a low-cost, high-velocity wholesale model tailored to small businesses and individual consumers. Over more than four decades of continuous expansion, the Company maintained strict operational discipline centered on a key ethical code: “Take Care of Our Members,” “Take Care of Our Employees,” “Respect Our Suppliers,” and “Reward Our Shareholders.” The corporate headquarters remains anchored in the Pacific Northwest at 999 Lake Drive, Issaquah, Washington 98027.

The Journey: History & Evolution

Costco’s growth trajectory reflects systematic geographic expansion, infrastructure development, and format diversification. Following its initial operational launch in 1983, the Company pioneered cross-docking logistics depots that aggregate high-volume freight shipments from global suppliers, enabling rapid transfers to retail units without long-term warehousing bottlenecks. The business expanded from its domestic base in Washington state across North America, subsequently establishing physical operations in Canada, Mexico, Asia, Europe, and Oceania.

Alongside its store expansion, Costco built digital ordering platforms, specialized business delivery centers tailored for commercial clients, and an array of ancillary operations including gas stations, optical centers, pharmacies, hearing aid centers, food courts, tire installation bays, and travel booking services. Digitally-enabled sales, which include transactions initiated via mobile applications, web platforms, and Costco Travel, expanded to represent 11% of total consolidated net sales in fiscal 2026.

• Physical Store Network Growth: Net store openings totaled 25 warehouses in 2026 (28 total openings including three relocations), following 27 openings (including three relocations) in 2025.
• Gasoline Business Expansion: Operated 774 high-volume gas stations adjacent to warehouses at the end of fiscal 2026, with fuel net sales contributing 11% of total company net sales.
• Digitally-Enabled Expansion: Digitally-enabled comparable sales surged by 21% during fiscal 2026, both as reported and on a constant-currency basis.

The Corporate Umbrella

Costco Wholesale Corporation functions as the ultimate parent company for a consolidated network of domestic and foreign operating subsidiaries. The corporate structure manages business operations across three primary reportable segments: United States, Canada, and Other International operations. All reportable segments follow standardized merchandising, inventory management, and low-cost warehouse logistics principles, adapted to local regulatory, cultural, and foreign currency environments.

⚙️ The Business Engine: What They Do & Where They Operate

The Core Divisions

Management reviews consolidated operational performance across three geographic segments: United States (which includes the 50 states, Washington, D.C., and Puerto Rico), Canada, and Other International (comprising Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Sweden, Iceland, and New Zealand). The U.S. and Canadian operations remain the foundational drivers of revenue and operational income.

In fiscal 2026, the United States segment generated 72.51% of total consolidated revenue (Calculated by FirmsWorld) and 65.44% of operating income (Calculated by FirmsWorld). Canada contributed 13.38% of total revenue (Calculated by FirmsWorld) and 18.03% of operating income (Calculated by FirmsWorld). The Other International segment delivered 14.11% of revenue (Calculated by FirmsWorld) and 16.53% of operating income (Calculated by FirmsWorld).

The Global Product Catalog

Costco limits its core warehouse inventory to fewer than 4,000 active stock keeping units (SKUs) per location, contrasting with traditional supermarkets and broadline retailers that stock tens of thousands of SKUs. E-commerce platforms host between 9,000 and 11,000 SKUs. Merchandise items are sold in case, carton, or multi-pack quantities to maximize throughput and minimize floor handling labor. Products and services are organized into four primary product lines.

Foods and Sundries (comprising sundries, dry grocery, candy, cooler, freezer, liquor, and tobacco) constituted 39.29% of total net sales in fiscal 2026 (Calculated by FirmsWorld). Non-Foods (consumer electronics, appliances, small electrics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys, seasonal, automotive, apparel, furniture, domestics, housewares, special order kiosks, and jewelry) accounted for 26.03% of net sales (Calculated by FirmsWorld). Warehouse Ancillary and Other Businesses (gasoline, pharmacy, food court, optical, hearing aids, tire installation, e-commerce, business centers, and travel) represented 20.65% of net sales (Calculated by FirmsWorld). Fresh Foods (meat, produce, deli, and bakery) accounted for the remaining 14.03% of net sales (Calculated by FirmsWorld).

• Core Merchandise Growth: Net sales across core merchandise categories (Foods and Sundries, Non-Foods, and Fresh Foods) expanded by $17,136 million or 8% in 2026.
• Ancillary & Other Sales Momentum: Warehouse Ancillary and Other Businesses net sales grew by $10,199 million or 20% in 2026, led by strong performance in gasoline fuel operations and pharmacy departments.

The Names You Know

Alongside leading national consumer brands, Costco manufactures and markets premium private-label products under its proprietary Kirkland Signature brand. Kirkland Signature items are engineered to match or exceed national brand quality standards while providing lower price points to members and higher gross profit margins for the Company. The private-label line encompasses packaged foods, beverages, fresh meats, household paper products, health and beauty items, apparel, cookware, luggage, and automotive supplies, serving as a key driver of member brand loyalty.

Mapping the Global Reach

At the end of fiscal 2026, Costco operated 939 membership warehouses across 15 countries and territories, demonstrating strong global retail expansion.

The Brick & Mortar Footprint

Costco’s global physical footprint encompassed 138.7 million square feet of warehouse floor space at August 30, 2026, including 96.6 million square feet in the U.S., 16.6 million square feet in Canada, and 25.5 million square feet in Other International markets. Average warehouse size is approximately 148,000 square feet. The Company also manages 33.6 million square feet of space dedicated to consolidation depots, fulfillment centers, and manufacturing facilities.

Of the 184 leased facilities worldwide, 136 represent land-only ground leases where Costco owns the physical building structure built on the site.

📊 The Financial Health: The Global Numbers Simplified

Earnings, Expenses, & Take-Home Profits

Costco achieved record top-line performance in fiscal 2026, with total consolidated revenue expanding to $303,154 million, driven by strong comparable store sales, warehouse network expansion, and membership fee income growth.

Gross margin expressed as a percentage of net sales was 11.09% in 2026, compared to 11.12% in 2025. Excluding the impact of gasoline price inflation, gross margin percentage increased by 10 basis points to 11.22%. Selling, general and administrative expenses as a percentage of net sales improved to 9.15%, a 10 basis point decrease compared to 9.25% in fiscal 2025.

• Comparable Store Sales Performance: Total company comparable store sales rose 8% in 2026 (7% excluding foreign exchange and gasoline price fluctuations), with U.S. comparable store sales rising 8%, Canada rising 8%, and Other International rising 10%.
• Membership Fee Income Surge: Membership fee revenue grew 11% to $5,907 million in 2026, benefiting from new member sign-ups, annual fee adjustments effective September 1, 2024, and Executive member upgrades.
• Tariff Recovery Gains: Following the U.S. Supreme Court ruling invalidating IEEPA tariffs in February 2026, Costco received $184 million in refunds during fiscal 2026 ($174 million credited to merchandise costs, $10 million credited to interest income). Subsequent to fiscal year-end, an additional $155 million was received.
• Per Share Diluted Earnings: Net income per diluted common share reached $20.76 in 2026, up 14% from $18.21 in 2025 and $16.56 in 2024.

Assets, Debts, & Corporate Wealth

Costco maintained a highly liquid balance sheet during fiscal 2026, backed by robust operating cash flow and cash reserves.

Working capital efficiency remains a hallmark of Costco’s balance sheet model. Accounts payable of $22,591 million at year-end exceeded total merchandise inventories of $19,324 million, confirming that vendor payables fund 100% of inventory carrying costs.

Cash Flow: Tracking the Money Movement

Cash flows generated by operations expanded substantially in fiscal 2026, driven by higher net profit and disciplined working capital management.

• Operating Cash Generation: Operating activities delivered $15,817 million in net cash, an 18.6% increase over 2025.
• Capital Spending Allocations: Capital expenditures reached $6,435 million in 2026, up from $5,498 million in 2025 and $4,710 million in 2024.
• Share Repurchases: Spent $848 million to repurchase 891,000 shares of common stock at an average price of $950.90 per share.
• Dividends Paid to Shareholders: Paid $2,458 million in cash dividends during 2026, following a 13% increase in the quarterly dividend rate to $1.47 per share in April 2026.

Funding the Future: R&D and Expansion Spending

Costco allocates capital toward store real estate acquisitions, warehouse construction, depot cross-docking facilities, food manufacturing plants, and technology infrastructure rather than traditional experimental research and development. In fiscal 2026, segment capital expenditures comprised $5,122 million in the U.S., $673 million in Canada, and $640 million in Other International markets.

Total principal debt outstanding at the end of 2026 stood at $6,175 million (net of $13 million in unamortized debt discounts and issuance costs, with $2,248 million classified as current portion). Senior Notes outstanding include $1,000 million of 3.000% notes due May 2027, $1,250 million of 1.375% notes due June 2027, $1,750 million of 1.600% notes due April 2030, and $1,000 million of 1.750% notes due April 2032. Other long-term debt consists of $1,175 million in Guaranteed Senior Notes issued by the Japanese subsidiary.

🗺️ The Corporate Family Tree: Structure & Investments

Subsidiaries, Associates, & Shared Ventures

Costco Wholesale Corporation operates worldwide through wholly owned direct and indirect operating subsidiaries. Primary regional subsidiaries include:

• Costco Wholesale Membership Inc.: Domestic operational and membership management arm.
• Costco Wholesale Canada Ltd.: Operating subsidiary for 115 warehouse locations across Canadian provinces.
• Costco Wholesale Mexico, S.A. de C.V.: Operating subsidiary managing 43 warehouses in Mexico.
• Costco Wholesale Japan Ltd.: Operating subsidiary for 37 Japanese warehouse facilities.
• Costco Wholesale UK Limited: Operating entity managing 29 warehouse units in the United Kingdom.
• Costco Wholesale Korea, Ltd.: Operating entity for 20 warehouses across South Korea.
• Costco Wholesale Australia Pty. Ltd.: Operating entity managing 15 Australian warehouse locations.
• Costco President Taiwan Inc.: Operating subsidiary for 14 warehouses in Taiwan.
• Costco (China) Investment Co., Ltd.: Operating subsidiary overseeing 7 Chinese warehouse locations.
• Costco Wholesale Spain S.L.U.: Operating subsidiary for 5 units in Spain.
• Costco Wholesale France S.A.S.: Operating entity for 3 warehouses in France.
• Costco Wholesale Sweden AB: Operating entity managing 2 warehouses in Sweden.
• Costco Wholesale Iceland ehf.: Operating entity managing 1 warehouse in Iceland.
• Costco Wholesale New Zealand Limited: Operating subsidiary managing 1 warehouse unit in New Zealand.
• Wholly Owned Captive Insurance Subsidiary: Reinsurance and self-insurance risk retention entity funding employee health, workers’ compensation, and property coverage liabilities.

👥 Power & Control: Who Pulls the Strings?

The Brain Trust: Board of Directors & Executive Leadership

Costco’s executive officer team consists of long-tenured retail managers, with most senior leaders possessing over 25 years of service within the organization.

• Ron M. Vachris (President and Chief Executive Officer): Age 61. Director since February 2022; President and CEO since January 2024. Previously served as President and COO (February 2022 to December 2023), Executive Vice President of Merchandising (June 2016 to January 2022), Senior Vice President of Real Estate Development (August 2015 to June 2016), and Senior Vice President/General Manager of the Northwest Region (2010 to July 2015).
• Gary Millerchip (Executive Vice President and Chief Financial Officer): Age 55. Executive Officer since joining Costco in 2024. Previously served as Senior Vice President and CFO of The Kroger Co. (April 2019 to February 2024) and CEO of Kroger Personal Finance (July 2010 to April 2019).
• Caton Frates (Senior Executive Vice President, Chief Operating Officer – Warehouse Operations, U.S. and Mexico): Age 58. Executive Officer since 2022. Appointed to current role in February 2026; previously EVP/COO of Southwest Division (2022 to February 2026) and SVP of Los Angeles Region (2015 to May 2022).
• Jim C. Klauer (Executive Vice President): Age 64. Executive Officer since 2018. Served as EVP/COO of Northern Division from 2018 to August 2026, and SVP of Non-Foods and E-commerce Merchandising (2013 to January 2018). Retiring effective October 30, 2026.
• Yoram Rubanenko (Executive Vice President, Chief Operating Officer – Eastern Division): Age 62. Executive Officer since 2021. Previously served as SVP/General Manager of Southeast Region (2013 to September 2021) and VP Regional Operations Manager for Northeast Region (1998 to 2013).
• John Sullivan (Executive Vice President, General Counsel & Corporate Secretary): Age 66. Executive Officer since 2021. General Counsel since 2016 and Corporate Secretary since 2010.
• Claudine Adamo (Executive Vice President, Administration): Age 56. Executive Officer since 2022. Appointed EVP of Administration in March 2026; previously EVP/COO of Merchandising (2022 to March 2026), SVP of Non-Foods (2018 to February 2022), and VP of Non-Foods (2013 to 2018).
• Pierre Riel (Executive Vice President, Chief Operating Officer, International Division): Age 63. Executive Officer since 2022. Previously SVP Country Manager Canada (2019 to March 2022) and SVP Eastern Canada Region (2001 to 2019).
• Javier Polit (Executive Vice President, Chief Information and Digital Officer): Age 62. Executive Officer since 2023. Previously CIO for Mondelez International (2022 to 2024), CIO for The Procter & Gamble Company (2017 to 2022), and Group CIO for The Coca-Cola Company (2007 to 2017).
• Teresa Jones (Executive Vice President, Chief Operating Officer – Global Depots and Traffic): Age 57. Executive Officer since 2024. Promoted to current role in July 2024; previously SVP of Depot Operations (August 2022 to July 2024) and VP of Depot Operations (2018 to 2022).
• W. Richard Wilcox (Executive Vice President, Chief Operating Officer, Southwest Division): Age 60. Executive Officer since 2025. Promoted to current role in October 2025; previously SVP/General Manager of San Diego Region (2016 to October 2025).
• Sarah George (Executive Vice President, Chief Operating Officer – Merchandising): Age 50. Executive Officer since 2026. Promoted to current role in March 2026; previously SVP Merchandising – Foods and Sundries (2023 to March 2026) and SVP Fresh Foods (2019 to 2023).
• Adam Self (Executive Vice President, Chief Operating Officer, Northern Division): Age 56. Executive Officer since 2026. Promoted to current role in August 2026; previously SVP/General Manager of Northeast Region (2020 to August 2026) and VP Regional Operations Manager for Northeast Region (2013 to March 2020).

Who Owns the Stock?

As of September 29, 2026, Costco Wholesale Corporation had 443,129,349 shares of common stock outstanding ($0.005 par value per share). The aggregate market value of voting stock held by non-affiliates as of February 15, 2026, was approximately $451.6 billion.

🎯 The Strategic Outlook: Future Plans & Potential Pitfalls

Competitive Advantages & Economic Moats

Costco maintains a formidable competitive moat driven by operational scale, rapid inventory turnover, membership fee revenue, private-label branding, and vendor terms.

• High Renewal Rates: Trailing renewal rates of 92.3% in North America and 89.8% globally indicate strong member retention and brand loyalty.
• Private-Label Penetration: The Kirkland Signature line provides lower retail prices to members while capturing higher gross margins than third-party national brands.
• Distribution Efficiency: Centralized cross-docking depots aggregate shipments to lower freight handling expenses, supporting low prices and high operating efficiency.
• Working Capital Cycle: A low-cost self-service format allows inventory to turn over rapidly, often generating cash before vendor invoices mature.

What Could Go Wrong? Key Challenges & Business Risks

Management highlights several operating, market, regulatory, and legal risks in the Form 10-K filing:

• Geographic Concentration: The U.S. and Canadian segments generated 86% of net sales and 83% of operating income in fiscal 2026. California alone accounted for 26% of total U.S. net sales.
• Supply Chain Volatility & Tariffs: Disruptions from extreme weather, labor disputes, port congestion, foreign exchange fluctuations, or new international tariffs can impact landed merchandise costs and gross margins.
• IT Systems & Cybersecurity: High daily transaction volumes across physical registers, gas pumps, and e-commerce portals require strong protection against ransomware, data breaches, and system outages.
• Regulatory & Legal Proceedings: The Company faces wage-and-hour litigation in California and Washington, historical opioid MDL claims, web pixel privacy class actions, and tariff refund disputes.

The Next Chapter: Growth & Expansion Initiatives

Costco plans to open up to 33 new membership warehouses (including five relocations) during fiscal 2027. Capital expenditures are projected to reach approximately $7,500 million in 2027, allocated toward real estate acquisitions, new store construction, depot network enhancements, logistics upgrades, digital platforms, and private-label processing infrastructure.

The Verdict: Strategic Outlook & Conclusion

Costco Wholesale Corporation delivered strong financial performance in fiscal 2026, generating $9,226 million in net income ($20.76 per diluted share) on $303,154 million in total revenue. Supported by $21,301 million in total cash, cash equivalents, and short-term investments, and operating cash flow of $15,817 million, the enterprise remains well funded to support its global store expansion, logistics networks, and digital infrastructure initiatives.

Official Site: https://www.costco.com