Costco Wholesale Corporation
Consumer Staples · Consumer Staples Distribution & Retail
Membership-fee economics, not retail margin. 9% US-Canada. Fees drop near-100% to operating income and let COST run merchandise at razor-thin gross margin as a deliberate moat. Fee hike cadence is ~5-6 years (last bump Sep 2024: $60 to $65 Gold Star, $120 to $130 Executive) - next sustained fee-income step-up roughly FY29-30.
Structural setup:
- Defensive comp engine: traffic + ticket both positive across rate / inflation regimes
- Kirkland (~30% of sales) widens value gap vs $WMT / $TGT / $KR private label and pulls members back
- E-comm + Costco Logistics (big-and-bulky) closes the only durable Amazon gap
- Warehouse-count growth ~25-30 net opens/yr is a clean compounder
- Fee economics make COST one of the highest-quality cash-flow profiles in retail
- Renewal rates hold through rate cycles - members renew before they cut groceries
- Executive tier mix climbing (>46% of paid, ~73% of sales) lifts ARPU and basket size
- International runway (China, Sweden, France) doubles addressable warehouse count
- ~50x forward P/E prices in zero policy risk; any renewal-rate or comp wobble repricing fast
- GLP-1 demand shock unproven but watched - bulk-pack grocery is the trade exposed
- Fee-hike cadence is now visible to the market; cannot surprise to the upside on it again before ~2029
- Wage inflation + healthcare cost growth compress an already 3.3% op margin if comps cool
No key levels recorded for this ticker.