Understand any stock in simple English
Enter a ticker to learn what the company does and how it makes money.
Costco runs membership-only warehouse stores where people buy everyday goods in bulk at low prices, and the company also makes money from annual membership fees.
Costco is a membership warehouse club. That means you can't just walk in and shop — you have to pay an annual fee to get in the door, and once you're inside, you're buying giant packs of stuff at prices that are usually lower than a regular supermarket. It serves everyday shoppers, families, and small businesses like restaurants and convenience stores that buy in bulk. It makes money two ways: selling merchandise at a thin markup, and collecting membership fees. Those fees are the secret sauce — they're almost pure profit and make up a huge chunk of Costco's actual earnings, even though they're a small slice of total revenue. Think of it as a club where the cover charge pays the bills, so the drinks can be cheap.
The business is mostly one big retail operation, not a bunch of separate segments. It runs warehouses in the US, Canada, Mexico, Japan, the UK, Korea, Australia, and a few other countries, plus a growing e-commerce arm. Its own Kirkland Signature brand is a big deal — it's roughly a third of what Costco sells and gives customers a reason to trust the store over a brand-name competitor. The recent story is steady growth: membership renewals stay very high (around 90% in the US and Canada), the company has been opening new warehouses and raising membership fees, and it continues to invest heavily in keeping prices low. Annual revenue is now in the hundreds of billions of dollars.
Costco got its start in 1976 as a single warehouse in San Diego, and the modern company was formed when Price Club and Costco merged in 1993. What it does with its cash is pretty simple and shareholder-friendly: it reinvests in new warehouses and technology, pays a modest dividend, occasionally pays a special dividend, and buys back some stock. It has never been a flashy company, but its model — low prices, loyal members, and fee income — has made it one of the most consistent retailers in the world.
Saved answer · last researched 17 Oct 2026