3 Must-Know Facts About Costco Before You Buy the Stock

• Costco doesn’t effort to maximize gross from merchandise sales, alternatively leaning connected its rank model.

• The company’s monolithic income base, coupled with a constricted SKU count, gives it a tremendous outgo advantage.

• The banal inactive trades astatine an costly valuation, but the marketplace mightiness ne'er connection Costco astatine a bargain.

• 10 stocks we similar amended than Costco Wholesale ›

Costco (NASDAQ: COST) is simply a monolithic business. In fiscal 2025 (ended Aug. 31), it registered $270 cardinal successful nett sales. This immense sum makes it the world's third-biggest retailer, down lone Walmart and Amazon.

Costco shares person historically performed precise well. Over the past decade, for example, they're up 429% (as of Dec. 23), providing a bully boost to capitalist portfolios. The retail stock is down 7% successful 2025, though.

Before you deed the bargain button, present are 3 must-know facts astir Costco.

Through its 921 warehouse clubs, Costco sells merchandise ranging from groceries and apparel to electronics and location goods. But making tons of wealth connected merchandise income isn't Costco's cardinal focus. The gross borderline was conscionable 11.3% successful Q1 2026 (ended Nov. 23), which reveals that absorption implements debased mark-ups connected its inventory. Retail peers typically person overmuch higher mark-ups connected their goods.

Instead, Costco runs a thriving rank model. Consumers indispensable wage an yearly interest to participate a warehouse and store for items. Costco's rank number grew 5.2% twelvemonth implicit twelvemonth to 81.4 cardinal successful the past quarter, helping summation rank income to $1.3 billion. The worldwide renewal complaint usually hovers astir 90%, showcasing beardown loyalty.

Memberships present a high-margin and recurring gross stream. And they person proven pricing power. They besides thrust customers to sojourn stores much frequently, truthful they consciousness that the yearly interest is worthy it. This mightiness explicate wherefore Costco has a stellar way grounds of posting same-store sales growth.

Great businesses are those that person economical moats, a word popularized by Warren Buffett. Costco excels successful this area. Its moat is supported by a almighty cost advantage. Credit straight goes to the company's unthinkable scale, arsenic demonstrated by the antecedently mentioned fiscal 2025 nett income of $270 billion.

The mean Costco nine has astir 4,000 stock-keeping units (SKUs). This is simply a importantly smaller fig than the 30,000 SKUs a mean supermarket mightiness carry. As a effect of a constrictive merchandise focus, Costco buys ample quantities of a constricted fig of goods. This gives it immense buying almighty and negotiating leverage implicit its supplier base, starring to debased costs and mundane savings for shoppers. This outgo vantage lone improves implicit time, arsenic greater income enactment much supplier leverage that leads to ongoing savings. It's a positive feedback loop.