Costco is one of the world’s largest warehouse retailers, operating a membership-based business model that generates recurring fee income while offering customers a limited range of products at highly competitive prices. The model creates a powerful flywheel: low prices attract members, high sales volumes strengthen supplier relationships, and membership fees support profitability.

The company delivered another strong year in FY2026. Revenue increased 10.1% to $297.3 billion, while operating income grew 12.1% to $11.6 billion. Costco’s operating margin improved slightly to 3.9%, demonstrating the company’s ability to grow profits while maintaining its low-price value proposition. Gross profit margins remained resilient despite tariff-related pressures and selective price reductions aimed at preserving Costco’s price leadership.

One of the more interesting developments during the year was the receipt of $184 million in tariff refunds. Rather than allowing the full benefit to flow through to earnings, management reinvested a significant portion into lower prices on everyday essentials such as coffee, nuts, and household products. This approach reinforces Costco’s long-standing strategy of using cost savings to strengthen customer loyalty and drive higher sales volumes.

Growth is also being supported by an ambitious expansion strategy. Costco opened 25 net new warehouses during FY2026 and plans to open 28 to 33 new locations in FY2027. Looking further ahead, management expects long-term growth to be driven equally by new warehouse openings and rising spending from its existing member base, with a particular focus on expansion opportunities across Asia and Europe over the coming decade.

With membership renewal rates remaining above 90%, a growing base of younger shoppers, and a disciplined approach to pricing and expansion, Costco continues to demonstrate why it remains one of the world’s most successful retail business models. Costco operates in a highly competitive environment. Costco, currently, offers some of the lowest prices to customers in the market; if competitors were to come in with lower prices or Costco were not able to maintain their low prices, they could likely lose significant market share.