COST

MKT CAP $441.1BP/E —DIV YIELD —FCF YIELD 2.13%REV TTM $303.2B +10.1%NET INCOME $9.2B +13.9%NET CASH $13.6B52W 850.00 – 1,094.32NEXT EARNINGS Dec 10SEC XBRL · TTM TO Invalid Date

How COST rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

53%

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111

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+299

words, now 9,313

New in FY2025

We are principally engaged in the operation of membership warehouses in the United States (U.S.) and Puerto Rico, Canada, Mexico, Japan, the United Kingdom (U.K.), Korea, Australia, Taiwan, China, Spain, France, Sweden, Iceland, and New Zealand.
Costco operated 914, 890, and 861 warehouses worldwide at August 31, 2025, September 1, 2024, and September 3, 2023.
References to 2025 and 2024 relate to the 52-week fiscal years ended August 31, 2025, and September 1, 2024.
General We operate membership warehouses and e-commerce sites based on the concept that offering low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover.
Floor plans are designed for efficiency in the use of selling space, the handling of merchandise, and the control of inventory.
Our operating hours are shorter than many other retailers, and due to other efficiencies inherent in a warehouse club operation, we believe labor costs are lower relative to the volume of sales.
In the U.S., we recently added exclusive shopping hours for our Executive members and our gasoline operations generally have extended hours.
We average from 9,000 to 10,000 SKUs online, some of which are available in our warehouses.
On certain electronic items, we have a 90-day return policy and provide, free of charge, technical support services, as well as an extended warranty.
Additional third-party warranty coverage is sold on certain electronic items and major appliances.
We offer merchandise and services in the following categories: ■ Core Merchandise Categories: • Foods and Sundries (including sundries, dry grocery, candy, cooler, freezer, liquor, and tobacco) • Non-Foods (including major appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosk, and jewelry) • Fresh Foods (including meat, produce, deli, and bakery) ■ Warehouse Ancillary (includes gasoline, pharmacy, optical, food court, hearing aids, and tire installation) ■ Other Businesses (includes e-commerce, business centers, travel, and other) Warehouse ancillary operate primarily within, next to or near our warehouses, encouraging more frequent shopping.
The number of warehouses with gas stations varies significantly by country.
We operated 747 gas stations at the end of 2025.
Our gasoline business represented approximately 10% of total net sales in 2025.
Our other businesses sell products and services that largely complement our warehouse operations.
Net sales for e-commerce represented approximately 7% of total net sales in 2025.
Digitally-enabled sales, which represents sales delivered to members that are initiated through a digital device, whether fulfilled through a warehouse or distribution center, as well as Costco Travel, represented approximately 10% of total net sales in 2025.
Our business centers carry items tailored for food services, convenience stores and offices and offer walk-in shopping and deliveries.
Costco Travel offers vacation packages, car rentals, cruises and other travel products exclusively for Costco members (offered to varying degrees in the U.S., Canada, Australia, and the U.K.).
When sources of supply become unavailable, we seek alternative sources or items.
For future product supply need, we pursue diversification in our supply-chain and seek to expand in-country production.
Gold Star memberships are available to individuals; Business memberships are limited to businesses, including individuals with a business license or comparable document.
Our annual fee for these memberships is $65 in the U.S. and varies in other countries.
Paid members (except affiliates) are eligible to upgrade to an Executive membership in the U.S., for an additional annual fee of $65.
Executive members earn a 2% reward on qualified purchases (generally up to a maximum reward of $1,250 per year), redeemable at Costco warehouses.
The sales penetration of Executive members represented approximately 73.6% of worldwide net sales in 2025.
Membership at the end of 2025, 2024, and 2023 was made up of the following (in thousands): 2025 2024 2023 Gold Star 68,300 63,700 58,800 Business, including affiliates 12,700 12,500 12,200 Total paid members 1 81,000 76,200 71,000 Household cards 64,200 60,600 56,900 Total cardholders 145,200 136,800 127,900 _______________ (1) Executive members represented 38,700, 35,400, and 32,300 of total paid members in 2025, 2024, and 2023.
These membership counts include active memberships as well as memberships that have expired and not renewed within the 12 months prior to the reporting date.
These expired memberships make up a small percentage of these membership counts, and many of them are subsequently renewed.
Our member renewal rate was 92.3% in the U.S. and Canada and 89.8% worldwide at the end of 2025.
That rate, which excludes affiliates of Business members, is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date.
Memberships that have an expiration date in the six months prior to the end of our reporting period are excluded from this calculation, regardless of whether or not they have been renewed.
Although most members renew prior to expiration, the vast majority of those who renew late do so within six months of expiration.
The timing of renewal after expiration is impacted by a variety of factors, such as warehouse openings and promotional activity.
Human Capital “Take Care of Our Employees,” is a key component of our code of ethics and is fundamental to our commitment to “Take Care of Our Members.” Compensation and benefits for employees is our largest expense after the cost of merchandise and is carefully monitored.
Employee Base At the end of 2025, we employed 341,000 employees worldwide.
The total number of employees by segment was: 2025 2024 2023 United States 223,000 219,000 208,000 Canada 55,000 53,000 51,000 Other International 63,000 61,000 57,000 Total employees 341,000 333,000 316,000 Growth and Engagement We believe that our warehouses are among the most productive in the retail industry, owing largely to the commitment and efficiency of our employees.
The more significant include: competitive compensation and benefits; a commitment to employee development and promoting from within; and a target ratio of at least 50% of our base being full-time employees.
In 2025, in the U.S. and Canada that rate was approximately 94% for employees who have been with us for at least one year.
Inclusion The commitment to “Take Care of Our Employees” includes promoting an inclusive and respectful workplace.

and 71 more.

Gone since FY2024

We are principally engaged in the operation of membership warehouses in the United States (U.S.) and Puerto Rico, Canada, Mexico, Japan, the United Kingdom (U.K.), Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden.
Costco operated 890, 861, and 838 warehouses worldwide at September 1, 2024, September 3, 2023, and August 28, 2022.
References to 2024 and 2022 relate to the 52-week fiscal years ended September 1, 2024, and August 28, 2022.
General We operate membership warehouses and e-commerce sites based on the concept that offering our members low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover.
Floor plans are designed for economy and efficiency in the use of selling space, the handling of merchandise, and the control of inventory.
Our warehouses on average operate on a seven-day, 70-hour week.
Gasoline operations generally have extended hours.
Because the hours of operation are shorter than many other retailers, and due to other efficiencies inherent in a warehouse-type operation, we believe labor costs are lower relative to the volume of sales.
We average anywhere from 9,000 to 10,000 SKUs online, some of which are available in our warehouses.
On certain electronic items, we typically have a 90-day return policy and provide, free of charge, technical support services, as well as an extended warranty.
Additional third-party warranty coverage is sold on certain electronic items.
We offer merchandise and services in the following categories: ■ Core Merchandise Categories (or core business): • Foods and Sundries (including sundries, dry grocery, candy, cooler, freezer, deli, liquor, and tobacco) • Non-Foods (including major appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, office supplies, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosk, and jewelry) • Fresh Foods (including meat, produce, service deli, and bakery) ■ Warehouse Ancillary (includes gasoline, pharmacy, optical, food court, hearing aids, and tire installation) ■ Other Businesses (includes e-commerce, business centers, travel, and other) Warehouse ancillary operate primarily within or next to our warehouses, encouraging members to shop more frequently.
The number of warehouses with gas stations varies significantly by country, and we have no gasoline business in Korea or Sweden.
We operated 719 gas stations at the end of 2024.
Our gasoline business represented approximately 12% of total net sales in 2024.
Our other businesses sell products and services that complement our warehouse operations.
Net sales for e-commerce represented approximately 7% of total net sales in 2024.
Digitally originated sales, which represents sales that a member initiates through a digitally enabled device, including e-commerce, business delivery, travel, and same-day grocery, represented approximately 9% of total net sales in 2024.
Our business centers carry items tailored specifically for food services, convenience stores and offices, and offer walk-in shopping and deliveries.
Costco Travel offers vacation packages, car rentals, cruises and other travel products exclusively for Costco members (offered in the U.S., Canada, and the U.K.).
When sources of supply become unavailable, we seek alternatives.
To ensure sufficient product supply for future growth, we pursue diversification in our supply-chain management and seek to expand in-country production.
Gold Star memberships are available to individuals; Business memberships are limited to businesses, including individuals with a business license, retail sales license, or comparable document.
During fiscal 2024, our annual fee for these memberships was $60 in the U.S. and varies in other countries.
Paid members (except affiliates) were eligible to upgrade to an Executive membership in the U.S., for an additional annual fee of $60.
Executive members earn a 2% reward on qualified purchases (generally up to a maximum reward of $1,000 per year), redeemable at Costco warehouses.
The sales penetration of Executive members represented approximately 73.3% of worldwide net sales in 2024.
Our member renewal rate was 92.9% in the U.S. and Canada and 90.5% worldwide at the end of 2024.
The majority of members renew within six months following their renewal date.
Our renewal rate, which excludes affiliates of Business members, is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date.
Our membership counts include active memberships as well as memberships that have not renewed within the 12 months prior to the reporting date.
Our membership was made up of the following (in thousands): 2024 2023 2022 Gold Star 63,700 58,800 54,000 Business, including affiliates 12,500 12,200 11,800 Total paid members 1 76,200 71,000 65,800 Household cards 60,600 56,900 53,100 Total cardholders 136,800 127,900 118,900 _______________ (1) Executive members represented 35,400, 32,300, and 29,100 of total paid members in 2024, 2023, and 2022.
Effective September 1, 2024, we increased our membership fees in the U.S. and Canada for Gold Star, Business, and Business affiliates to $65 per year.
The Executive membership fee increased from $120 to $130 (membership fee of $65, plus Executive upgrade of $65), and the maximum annual 2% reward associated with the Executive Membership increased from $1,000 to $1,250.
Human Capital “Take Care of Our Employees,” is a key component of our code of ethics and is fundamental to our commitment to “Take Care of Our Members.” We must also carefully control our selling, general and administrative (SG&A) expenses, so that we can sell high quality goods and services at low prices.
Compensation and benefits for employees is our largest expense after the cost of merchandise and is carefully monitored.
Employee Base At the end of 2024, we employed 333,000 employees worldwide.
Approximately 5% are represented by unions.
The total number of employees by segment was: 2024 2023 2022 United States 219,000 208,000 202,000 Canada 53,000 51,000 50,000 Other International 61,000 57,000 52,000 Total employees 333,000 316,000 304,000 Growth and Engagement We believe that our warehouses are among the most productive in the retail industry, owing largely to the commitment and efficiency of our employees.
The more significant include: competitive compensation and benefits; a commitment to employee development and promoting from within; and a target ratio of at least 50% of our employee base being full-time employees.

and 63 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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