Costco — the strategy behind it | Stratrix

Company profile

Industry: Retail-Variety Stores
Listed: Nasdaq: COST
Incorporated: WA
Headquarters: Issaquah, WA
Fiscal year end: Aug 30

Financials

FY2025

Revenue: $275.2B
Net income: $8.10B
Total assets: $77.1B

Costco — reported revenue, net income and total assets by fiscal year, from SEC filings
Fiscal year	Revenue	Net income	Total assets
FY2025	$275.2B	$8.10B	$77.1B
FY2024	$254.5B	$7.37B	$69.8B
FY2023	$242.3B	$6.29B	$69.0B
FY2022	$227.0B	$5.84B	$64.2B
FY2021	$195.9B	$5.01B	$59.3B
FY2020	$166.8B	$4.00B	$55.6B

Reported fiscal years from SEC filings (10-K) — SEC EDGAR ↗. Stratrix is a strategy publication, not a real-time financial data service.

In depth

Costco's Membership Model Strategy

Traditional retail operates on a fundamental tension: the retailer profits by marking up products, which means the retailer's financial interest is directly opposed to the customer's interest in payin

The analyses

The Cannibalization Choice · Decision Forks

Costco Could Raise Your Fee More Often. The Reason It Won't Is Worth $5 Billion.

Costco waited seven years to raise its membership fee in 2024 - the longest gap on record - then nudged it $5. That restraint isn't generosity. On ~$5B of near-pure-margin fee income, the math punishes any hike that scares members off.

The Doctrine · People & Control

Costco's High Wages and Its 4,000-Item Limit Are the Same Decision

Costco pays warehouse clerks up to $31.90/hr and stocks fewer than 4,000 items where a supermarket carries 30,000. These look like two unrelated virtues. They are one machine - and each pillar would collapse without the other.

The Loss Leader · Business Model

Even at $1.50, Costco's Hot Dog Factory Turns a Profit — and Makes the $60 Membership Feel Free

Everyone says Costco loses money on every hot dog. Its own CFO won't confirm it, and its CEO says the in-house factory turned a profit even at $1.50. The dog isn't bleaking cash - it's making a $60 membership fee feel free.

The Market-Entry Gambit · Decision Forks

Costco Spent 25 Years in Korea to Learn How to Win China in Five.

Costco's two Asian bets look identical and aren't. Korea is a 30-year market opened one store at a time; China is a wholly-owned sprint that has already lapped it - and Costco is moving its Korean staff east to prove which one was really the training ground.

The Moat Anatomy · Moat & Competition

Costco Collects $5.3 Billion in Fees to Fund the Prices That Keep 92.3% of Members Renewing

Costco renews 92.3% of its members a year and pulls in $5.3 billion in fees that fund the low prices that keep them. Add Kirkland Signature — an estimated $86B brand you can buy nowhere else — and the trap closes on itself.

The Moat Anatomy · Moat & Competition

At High-20s Percent of Net Sales, Kirkland Is Costco's Lever on Every National Brand

Most retailers' private labels are the cheap shelf you ignore. Kirkland is roughly the high-20s percent of Costco's net sales — a brand bigger than most public companies — and the moat isn't the label. It's what Costco does to a national brand that won't lower its price.

The Self-Imposed Constraint · Business Model

Costco Caps Its Own Markups. The Cap Is the Whole Business Model.

Costco's famous ~14% markup ceiling appears in no SEC filing - it's an internal rule. But the constraint isn't generosity. It forces the membership fee to carry the profit, which forces low prices to be self-reinforcing rather than discretionary.