How Does Costco Make Money?

How much did Costco earn in fiscal 2026?

Costco's fiscal year ends on the Sunday closest to August 31, and fiscal 2026 ran for 52 weeks to August 30, 2026.^[1][2] The company published its results for that year in an earnings release on September 24, 2026.^[2] The financial statements in that release are labeled unaudited.^[2] As of October 5, 2026, the newest annual report (Form 10-K) in the U.S. Securities and Exchange Commission (SEC) list of Costco filings was the one filed on October 8, 2025, which covers the fiscal year that ended August 31, 2025.^[4][1] For that reason, the fiscal 2026 figures here come from the release and its supplement, and the descriptions of how the business works come from the fiscal 2025 Form 10-K.^[1][2][3]

The income statement in the release gives these full-year figures, in millions of U.S. dollars.^[2]

The release adds that fourth-quarter profit included a one-time net benefit of $0.15 per diluted share from tariff refunds.^[2] On the date of the release, Costco operated 939 warehouses, 647 of them in the United States and Puerto Rico.^[2]

Why are Costco's profit margins on goods so thin?

Costco's stated concept is to offer low prices on a limited selection of branded and private-label products, which is meant to produce high sales volumes and fast inventory turnover.^[1] The company says those volumes, combined with bulk buying, efficient distribution and no-frills self-service buildings, let it operate profitably at much lower gross margins than most other retailers.^[1]

The fiscal 2026 figures show the size of that margin: net sales were $297,247 million and merchandise costs were $264,279 million.^[2] The difference is $32,968 million, or about 11.1% of net sales (a calculation from those two figures).^[2] Taking away selling, general and administrative costs of $27,190 million as well leaves $5,778 million, about 1.9% of net sales (also a calculation).^[2] The annual report describes the business as running on very low margins, so that modest changes in merchandise costs or in selling and administrative costs can have a large effect on net income.^[1]

Net sales cover more than groceries and household goods.^[1] They also include gasoline, pharmacy, optical, food court and online sales.^[1] Gasoline was about 10% of net sales in fiscal 2025.^[1]

How much of Costco's profit comes from membership fees?

Membership fees brought in $5,907 million in fiscal 2026.^[2] Set against total revenue of $303,154 million, that is about 1.9% of revenue (5,907 ÷ 303,154, a calculation).^[2] Set against operating income of $11,685 million, the fees are equal to about 50.6%, or roughly half (5,907 ÷ 11,685, a calculation).^[2] Put another way, operating income is the $5,778 million left after the costs above plus the $5,907 million of fees (5,778 + 5,907 = 11,685).^[2]

• Membership fees5,907
• Operating income11,685
• Net income9,226

Source: Costco Wholesale Corporation (filed with the U.S. Securities and Exchange Commission) [2]

These comparisons need care, because the income statement does not list separate costs for the membership program.^[2] The figures show how large the fees are next to profit, not an exact split of where the profit came from.^[2] Costco's annual report calls the membership format integral to its business and profitability.^[1] The same report says the company believes the most important driver of its profitability is growth in net sales.^[1]

How many members does Costco have, and how many renew?

At the end of fiscal 2026, Costco counted 84.1 million paid memberships and 150.4 million total cardholders.^[3] The cardholder total also counts the free household card that comes with every paid membership.^[1]

The fiscal 2025 annual report lists two basic membership types, Gold Star for individuals and Business for businesses, each with an annual fee of $65 in the United States and different fees in other countries.^[1] Paid members in the U.S. can upgrade to Executive for another $65 a year and earn a 2% reward on qualified purchases, generally up to $1,250 a year.^[1] The fourth-quarter fiscal 2026 supplement counted 42.3 million Executive memberships and put the share of sales made to Executive members at 75.6%.^[3]

According to the annual report, the membership format is designed to build loyalty and provide a continuing stream of fee revenue.^[1] The renewal rate at the end of fiscal 2026 was 92.3% in the U.S. and Canada and 89.8% worldwide, the same two figures the company reported at the end of fiscal 2025.^[3][1] The report says that growth in the membership base, more Executive memberships and high renewal rates materially influence profitability.^[1] In the accounts, fee revenue is spread evenly over the one-year membership period instead of being counted all at once.^[1]

What do Kirkland Signature and a small product range add?

A Costco warehouse carries fewer than 4,000 active items (called SKUs), which the company says is far fewer than other broad-line retailers.^[1] It tries to keep most items to fast-selling models, sizes and colors, and it sells many consumable products only in case, carton or multi-pack quantities.^[1] Goods are generally displayed on pallets in large quantities, which reduces the labor needed.^[1] Costco also says it often sells inventory before it has to pay the supplier for it.^[1]

Kirkland Signature is Costco's private-label brand.^[1] The company says it believes these products are high quality, are generally priced below national brands and generally earn higher margins.^[1] It also says they make up a growing portion of overall sales.^[1] The fiscal 2025 Form 10-K does not give a sales figure for the brand.^[1]