COSTCO WHOLESALE CORP /NEW (COST)

Costco Wholesale Corporation, founded in 1983 and headquartered in Issaquah, Washington, operates membership warehouse clubs and e-commerce websites across the United States, Puerto Rico, Canada, Mexico, Japan, the United Kingdom, Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden. As of fiscal year-end September 3, 2023, the company operated 861 warehouses worldwide and generated net sales of $237.71 billion, an increase of 7% over the prior year, driven by a 3% rise in comparable sales, new warehouse openings, and one extra sales week due to its 53-week fiscal year. Membership fee revenue rose 8% to $4.58 billion, supported by new sign-ups and Executive membership upgrades; the company ended the year with 71 million paid members and 127.9 million total cardholders, with a worldwide renewal rate of 90.4%.

Costco's business model centers on offering a limited selection (fewer than 4,000 SKUs per warehouse) of nationally branded and private-label merchandise—including its Kirkland Signature brand—at low prices, enabled by high sales volume, rapid inventory turnover, and efficient distribution through cross-docking depots. Revenue categories include core merchandise (foods and sundries, non-foods, fresh foods), warehouse ancillary services (gasoline, pharmacy, optical, food court, hearing aids, tire installation), and other businesses (e-commerce, business centers, travel). Gasoline sales represented about 13% of net sales, while e-commerce contributed roughly 6%.

Net income for fiscal 2023 increased 8% to $6.29 billion, or $14.16 per diluted share, with gross margin percentage rising slightly due to a smaller LIFO charge, partially offset by $391 million in charges related to discontinuing charter shipping activities; SG&A expenses as a percentage of sales rose 20 basis points due to wage increases and softer sales growth. The effective tax rate was 25.9%. The company employed 316,000 workers globally, with about 95% in warehouse and distribution roles and a 90% one-year retention rate in the U.S.; it raised entry-level wages to at least $18.50 per hour in September 2023.

In 2023, Costco opened 26 new warehouses (13 net new in the U.S. and 10 in Other International markets), authorized a new $4 billion share repurchase program, and approved a 13% increase in its quarterly dividend. The company faces intense competition from Walmart, Target, Kroger, Amazon, Sam’s Club, and BJ’s Wholesale Club, and continues to emphasize its "pricing authority" strategy, private-label expansion, and employee-focused compensation philosophy as key drivers of long-term profitability. Common stock trades on the NASDAQ Global Select Market under the ticker "COST," with approximately 442.7 million shares outstanding as of October 3, 2023, and a non-affiliate market value of about $221.35 billion as of February 12, 2023.