01—Abstract
Summary
Summary of the 10-K filed October 7, 2026. Cited figures are marked; the original filing is the authoritative source.
Costco Wholesale Corporation's 2026 Form 10-K highlights a year of robust growth and continued expansion.
The company reported a 10% increase in net sales, reaching $297.2 billiona, driven by strong comparable sales growth and the addition of 25 net new warehouses globally. Membership fee revenue also saw a healthy 11% rise, underscoring the loyalty and value proposition offered to its members. Despite a slight decrease in gross margin percentage, the company's operational efficiencies and strategic pricing helped maintain a healthy overall financial performance, with net income increasing by 14% to $9.2 billion.
The report emphasizes Costco's consistent strategy of offering high-quality merchandise at low prices, supported by efficient operations and a strong membership model. The company continues to invest in its physical footprint and digital capabilities, indicating a commitment to both its traditional warehouse model and evolving e-commerce offerings. Management also highlighted a significant increase in capital expenditures for fiscal year 2027, signaling aggressive plans for continued expansion and infrastructure improvements to support future growth.
02—Key points
Key Highlights
- Net sales increased by 10% to $297.2 billion in fiscal year 2026, driven by comparable sales growth and new warehouse openings.
- Membership fee revenue grew by 11% to $5.9 billion, reflecting strong member retention and upgrades to Executive memberships.
- Costco opened 25 net new warehouses in 2026, expanding its global footprint and driving overall sales growth.
- Net income rose by 14% to $9.2 billion, with diluted earnings per share of $20.76.
- The company's Executive members accounted for approximately 75.2% of worldwide net sales in 2026, demonstrating the value of the premium membership tier.
- Investment in capital expenditures is planned to increase to approximately $7.5 billion in fiscal 2027, indicating a strong focus on future growth and expansion.
- The Board of Directors approved a 13% increase in the quarterly cash dividend, signaling confidence in the company's financial health and commitment to returning value to shareholders.
03—Questions
Frequently Asked Questions
What was the primary driver of Costco's net sales growth in fiscal year 2026?
The primary driver of net sales growth in fiscal year 2026 was a 10% increase, primarily attributable to an 8% increase in comparable sales and the addition of 25 net new warehouses.
How is Costco managing potential increases in merchandise costs?
Costco employs several strategies to manage merchandise costs, including working with suppliers to share cost increases, purchasing earlier and in greater volumes, sourcing items in regions where they are sold, and selectively passing cost increases to members. Investments in price reductions are also made to drive sales.
What is the company's strategy regarding international expansion?
Costco continues to expand internationally, with 'Other International' operations showing a 12% increase in total revenue and a higher rate of square footage growth compared to other segments. The company plans to open more warehouses in international markets where the base is smaller.
How does Costco approach employee compensation and retention?
Costco emphasizes taking care of its employees through competitive compensation and benefits, employee development, and promoting from within. They aim for a high retention rate, as evidenced by a 94% retention rate for employees with at least one year of service in the U.S. and Canada in 2026. This approach is considered fundamental to their commitment to member service.
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