COSTCO WHOLESALE Business Summary

Costco Wholesale Corp (COST) operates a membership-only warehouse club model, generating revenue primarily through annual membership fees and the high-volume sale of bulk merchandise at thin margins. While merchandise sales account for approximately 95% of net sales, membership fees contribute roughly 65% of the company's operating income, providing a stable, high-margin recurring revenue stream. The business is organized into core segments including Foods and Sundries, Non-Foods, Fresh Foods, and Warehouse Ancillary services such as gasoline, pharmacy, and optical. A critical driver of its value proposition is the Kirkland Signature private label, which represents about one-third of total sales. Costco competes directly with Walmart’s Sam’s Club, BJ’s Wholesale Club, and Amazon, maintaining a dominant market position characterized by a cost-leadership strategy, limited stock-keeping units (SKUs) to maximize buying power, and industry-leading membership renewal rates exceeding 90%. Founded in 1983 by James Sinegal and Jeffrey Brotman, Costco is currently led by CEO and President Ron M. Vachris, a company veteran who rose through the ranks over four decades to succeed W. Craig Jelinek in early 2024. The executive team includes Executive VP and CFO Gary Millerchip, who joined from Kroger in 2024, and Chief Technology Officer Torsten Lubach, who oversees the firm’s digital modernization and e-commerce expansion. Other key leaders include Javier Polit, Executive VP and Chief Information & Digital Officer, and Caton Frates, who assumed the role of Senior EVP of Warehouse Operations for U.S. and Mexico in February 2026. The company’s Board of Directors is chaired by Hamilton E. James, former Executive Vice Chairman of The Blackstone Group, and includes notable members such as former U.S. Secretary of Commerce Gina Raimondo, who was elected to the board in January 2026.