7 September 2026. Built from Costco’s SEC filings — Form 10-K for FY2016 through FY2025, Form 10-Q through FY2026 Q3 (12 weeks ended 10 May 2026), proxies and Form 8-K filings — with independent primary sources: the filings of Walmart, BJ’s Wholesale, Kroger, Albertsons, Target, Dollar General and Amazon; US Census Bureau; Bureau of Labor Statistics; USDA ERS; the Federal Register; USTR; the FTC; and the Supreme Court. Fiscal 2026 ended 30 August 2026 and only sales have been released — the FY2026 income statement and membership statistics are not yet reported. This is not a valuation and not a recommendation.
In FY2025 the average paid household paid $66 in membership fees, bought $3,332 of merchandise, and produced $128 of operating income. A little under half of that came from selling it things. A little over half came from the household simply agreeing to remain a member — and the fee is collected before the goods are delivered, and often before Costco has paid its suppliers for them.
| What the business is | A membership retailer. 914 warehouses at FY2025 year-end; 939 as of September 2026, of which 647 are in the US and Puerto Rico. |
|---|---|
| Industry | Warehouse club retail inside the broader grocery and general-merchandise market. Three US operators of scale: Costco, Sam’s Club (Walmart), BJ’s Wholesale. |
| How it makes money | An annual fee from 81m paying households, plus merchandise sold at roughly an 11% gross markup. |
| The unit | One paid household membership — $66 fee, $3,332 of purchases, $128 of operating income (FY2025, computed). |
| What protects it | ~4× the sales per building of its nearest club competitor, funding a 9.25% expense ratio; 92.3% renewal; ownership of the building at 866 of 914 warehouses. |
| What drives earnings | Paid household growth, Executive-tier mix, sales density per warehouse, and periodic fee increases. |
| What to watch | Comps excluding gasoline and currency; shopping frequency versus ticket; core merchandise gross margin; renewal rate. |
| Cycle exposure | Low. Merchandise comps went negative in FY2009; membership fee income has never declined in a downturn, at Costco or BJ’s. |
Costco FY2025 10-K; FY2026 Q3 10-Q; Costco August 2026 sales release (2 September 2026).
The problem Costco solves is a pricing problem, not a convenience problem. A supermarket needs a 22–27% gross margin to survive and a mass merchant roughly 25–28%, because that is what their operating costs consume. Costco’s proposition is that a household willing to pay an annual fee, buy larger pack sizes, accept a limited assortment and drive to a large box on the edge of town can buy the same goods at an 11% markup instead. The fee is what makes that arithmetic work.
Everything organises around the paid household. At FY2025 year-end there were 81.0 million of them and 145.2 million cardholders. They paid $5,323m in fees and bought $269,912m of merchandise. The decomposition in the block above is the whole business: a little under half the profit on each household comes from selling it things, a little over half from the household staying. Deferred membership fees sat at $3,157m at Q3 FY2026 — cash collected before the service is delivered. Merchandise is often sold before it is paid for: accounts payable of $19,783m exceeded merchandise inventories of $18,116m at FY2025 year-end, so working capital is negative and the float funds growth.
The household pays $65 for Gold Star or $130 for Executive, which returns 2% of qualified purchases up to $1,250 a year. Executive members were 38.7 million of the 81.0 million paid households at FY2025 year-end — 47.8% — and generated 73.6% of worldwide net sales. That 2% reward is recorded as a reduction of net sales, not an expense: $3,007m in FY2025. The household shops a warehouse averaging roughly 147,000 square feet stocking fewer than 4,000 active SKUs, against 9,000–10,000 online.
The warehouse is the second-order unit — 914 at FY2025 year-end, each serving roughly 88,600 paid households. Costco discloses average sales per warehouse directly: $272m in FY2025, normalised for first-year and 53-week effects, against $159m in FY2016. Warehouses opened in 2016 or earlier averaged $287m; those opened in FY2025 averaged $192m. New units are dilutive to the average for roughly a decade, which is the single most important thing to understand about Costco’s unit growth.
Merchandise splits four ways in FY2025: foods and sundries 40.6% of net sales, non-foods 26.4%, fresh foods 14.1%, and warehouse ancillary and other businesses 19.0% — gasoline, pharmacy, optical, food court, hearing aids, tyres, plus e-commerce, business centres and travel. Gasoline alone was approximately 10% of net sales through 747 stations. Two mix movements matter: ancillary rose from roughly 15% of net sales in FY2016 to 20.0% in FY2024 on gasoline penetration, which peaked near 14% in FY2022; and non-foods peaked at 29.1% in FY2021 during the pandemic goods boom and gave the whole gain back by FY2023. One line was genuinely exited — Costco chartered its own ocean freight during the supply crunch, then wound it down, taking $391m of charges in FY2023 worth 16 basis points of gross margin.
What the club industry sells is not merchandise but access: the right to buy at wholesale-adjacent prices, renewed annually. The margin structure of US retail explains almost everything about who can and cannot compete on those terms.
| Company | Format | Gross margin | Operating expense | Operating margin |
|---|---|---|---|---|
| Costco (FY2025) | Warehouse club | 11.1% | 9.3% | ~3.8% |
| BJ’s Wholesale (FY2025) | Warehouse club | ~16.5% | 15.0% | 3.9% |
| Sam’s Club US (FY2026) | Warehouse club | n/d | n/d | 2.6% |
| Walmart total (FY2026) | Mass merchant | 24.3% | 21.2% | 4.2% |
| Target (FY2025) | Mass merchant | 27.9% | 20.6% | 4.9% |
| Kroger (FY2025) | Supermarket | 22.9% | n/d | 1.3% |
| Albertsons (FY2025) | Supermarket | 27.2% | 26.3% | 0.9% |
| Dollar General (FY2025) | Small-box discount | 30.7% | 25.5% | 5.2% |
| Amazon North America (2025) | E-commerce | n/d | n/d | 6.9% |
Ratios on net sales. BJ’s gross margin inferred from its reported operating income, membership fee income and SG&A. Costco’s operating margin is on net sales and includes membership fees in the numerator. Sam’s Club is a Walmart segment and discloses no gross margin, operating expense or membership fee income of its own.
The binding constraint is arithmetic, not aggression. Albertsons’ operating expenses alone, at 26.3% of sales, are 2.4 times Costco’s entire gross margin; Target’s 20.6% is 1.9 times. A supermarket or mass merchant cannot cut its markup to 11% and remain solvent — it is not declining to compete, it is unable to. Dollar General, despite the name, runs the table’s highest gross margin at 30.7%: it achieves a low ticket through small packs and small boxes, not a low markup, and earns its profit on the markup itself. It is a convenience format and the opposite of the club model.
The mechanism behind Costco’s position is volume per building. Net sales divided by unit count gives $316.6m per Costco warehouse, $154.8m per Sam’s Club and $79.7m per BJ’s club — a ratio of roughly 4 : 2 : 1. Occupancy, utilities, club management and much of the labour bill do not scale with volume. Four times the throughput through one box pays for an expense ratio 5.8 points below BJ’s, which funds a gross margin 5.4 points below BJ’s, which is the price gap the member experiences. The low price is the output of the cost structure, not the input.
National share statistics are close to meaningless here. The FTC has treated grocery geographic markets as highly localised — alleging in one case a market “as small as approximately five or six miles in radius” — and has generally not included club formats in supermarket market definitions at all. BJ’s disclosed in an earlier filing that approximately 85% of its full-size clubs had at least one competing club within about ten miles. A club chain is a portfolio of overlapping ten-mile local positions, not one national franchise. Where a competitor has density — BJ’s says it runs nearly three times the club count of the next largest club competitor in New England — Costco’s economics are contested. Where it does not, they are not.
Siting binds as a cost and pace constraint, not an absolute one. A club needs ten to fourteen acres, and US private commercial construction put in place was down 4.7% year on year in July 2026 (Census Bureau). Yet all three operators keep opening: Costco went from 540 warehouses in FY2010 to 939 in FY2026, BJ’s from 189 to 263, and Sam’s Club plans roughly fifteen clubs a year. Sites are being secured, so availability is not the barrier.
No fourth US warehouse club of scale has entered in the last twenty years — no primary source consulted records one. Sam’s Club closed 63 clubs in January 2018 and, at 601 eight years later, has a net gain of four. The real barrier is the combination of a ten-mile trade area already served by an incumbent renewing at 90% or better, and the requirement to match an 11% gross margin from opening day with no membership annuity yet built. An entrant must fund the price gap out of equity for years before density arrives. That is a harder problem than finding land.
Three things would be hardest for a well-funded competitor to reproduce: the volume density itself, which took four decades to build; the real estate, since Costco owns the building at 866 of 914 warehouses and both land and building at 725, leasing both at only 48; and the renewal base of 92.3% in the US and Canada — against BJ’s 90% measured only on tenured members, which excludes the highest-churn first-year cohort, and against Sam’s Club, which discloses no renewal rate at all.
Two of Costco’s own claims cannot be verified from outside. Item-level price leadership has no primary basket comparison behind it, and Costco’s gross margin actually rose from 10.92% to 11.12% between FY2024 and FY2025, which sits awkwardly beside a claim to be minimising price. The Kirkland Signature margin premium is asserted in the filings but never quantified — Costco has disclosed no private-label penetration percentage and no margin differential in any year reviewed. BJ’s discloses its own private label at 27% of net sales excluding gasoline, the only benchmark in the channel.
The evidence points to three conditions for winning here: the lowest gross margin requirement in the market, a recurring fee that funds the price gap, and the highest sales per box to amortise fixed cost. Costco meets all three by the widest margin in the channel. The qualification is that all three are defences against store-based competitors.
Costco grew net sales 10.2% in fiscal 2026, to $297.3bn. That number is a poor description of the business, and the company supplies the tools to take it apart.
| Component | Contribution | Note |
|---|---|---|
| Reported net sales growth | +10.2% | $297.3bn from $269.9bn |
| Comparable sales, as reported | +8.4% | Total company |
| Comparable sales, excluding gasoline prices and currency | +6.6% | The underlying rate |
| Gasoline price and currency contribution to the comp | +1.8pp | Reverses when prices reverse |
| New-warehouse contribution to net sales growth | ~+1.8pp | 25 net new units, 914 → 939 |
| Acquisition contribution | nil | No material acquisition since 2022 |
Costco August 2026 sales release and FY2025 10-K. The new-warehouse contribution is the residual between reported net sales growth and reported comparable sales growth, and is therefore approximate.
Acquisitions do not feature. In a decade Costco made two transactions of any size — Innovel Solutions for $998m in March 2020 and the buyout of its Taiwan minority partner for $1,050m in June 2022 — against $269.9bn of FY2025 revenue. Reported growth and organic growth are the same thing at the corporate level. The distortion in the headline comes not from acquisition accounting but from two things that move on their own: the price of gasoline and the value of the dollar. Both were headwinds in FY2025 (gasoline −$2,329m, −93bp; currency −$1,943m, −78bp) and tailwinds in FY2026. By Q3 FY2026 the average price per gallon was up 20%, adding 221bp to net sales, while currency added 104bp. Roughly three of the twelve points of Q3 net sales growth came from gasoline price alone. An investor reading the reported line without the adjusted line is reading the oil market.
Twenty-five net new units in FY2026, 2.7% of the base, worth roughly 1.8 points of net sales growth. The lever is weakening on management’s own account: as the base grows and desirable sites get harder to secure, square footage growth becomes “a comparatively less substantial component of growth”, new warehouses open at lower initial profitability, and they cannibalise existing warehouses in existing markets.
81.0m paid households at FY2025 year-end to 82.9m by Q3 FY2026, up 4.1% year on year; cardholders 148.5m. Frequency is the higher-quality half of the comp, and it is decelerating — 5% growth in FY2025, 3% in each of the first two quarters of FY2026, 2% in the third.
39% of paid members in FY2016, 47.8% in FY2025, generating 73.6% of worldwide net sales. Each upgrade doubles the US fee from $65 to $130 against a 2% reward capped at $1,250. Costco named Executive upgrades as a fee-growth driver for the first time in Q3 FY2026 and has added Executive-only shopping hours. Real, but finite — it ends when penetration stops rising.
Exactly two in the decade. On 1 June 2017 the US fee went $55 → $60, Executive $110 → $120, reward cap $750 → $1,000 — worth roughly $178m in FY2018. On 1 September 2024 it went $60 → $65, Executive $120 → $130, cap → $1,250, guided at approximately $370m over two years. The cadence is roughly seven years, and the second increase has now fully lapped: about 40% of membership income growth in FY2025, about 35% in Q2 FY2026, about 25% in Q3.
285 of 914 warehouses — 31% of the estate — were outside the US at FY2025 year-end, generating 27% of net sales and 34% of operating income. The mix is favourable: Canada earned a 5.01% segment operating margin and Other International 4.33%, against 3.44% in the US. Growth outside the US is margin-accretive at the segment level.
E-commerce was approximately 7% of net sales in FY2025 and digitally-enabled sales approximately 10%; the digitally-enabled comp grew 20.9% in FY2026. Costco states plainly that this business carries a lower gross margin than its warehouse operations, so mix shift here is a margin headwind even as it is a growth tailwind. The metric was redefined in FY2026 to include Costco Travel, so it is not on the same basis as FY2025.
Worth 1.8 points of the FY2026 comparable sales figure and nothing at all to the underlying business. This is the driver most likely to be mistaken for one of the others.
The most important thing that happened to Costco’s economics over the last decade is not visible in the headline margin, which barely moved. It is visible in what the margin is made of.
| FY2016 | FY2020 | FY2022 | FY2025 | |
|---|---|---|---|---|
| Net sales ($m) | 116,073 | 163,220 | 222,730 | 269,912 |
| Membership fees ($m) | 2,646 | 3,541 | 4,224 | 5,323 |
| Gross margin, % of net sales | 11.35% | 11.20% | 10.48% | 11.12% |
| SG&A, % of net sales | 10.40% | 10.01% | 8.88% | 9.25% |
| Operating income ($m) | 3,672 | 5,435 | 7,793 | 10,383 |
| Membership fees as % of operating income | 72.1% | 65.2% | 54.2% | 51.3% |
Three comparability breaks apply. From FY2022 preopening expenses were folded into SG&A with prior years restated, raising FY2020 SG&A from $16,332m to $16,387m — roughly three basis points. The FY2019 adoption of ASC 606 grossed up net sales by $1,332m with only an $8m effect on gross margin, so ratios before and after FY2019 are not exactly comparable. Most importantly, gasoline was approximately 14% of net sales in FY2022 against roughly 9% in FY2020 and 10% in FY2025; excluding gasoline price inflation, FY2022 gross margin was 10.94%, not the 10.48% reported.
Membership fees supplied 72.1% of operating income in FY2016 and 51.3% in FY2025. The familiar claim that Costco makes all its money on membership fees was close to true a decade ago and is becoming less true every year. The mechanism is the gap between gross margin and SG&A — what the merchandise operation earns before the fee is added. That spread was 0.95% of net sales in FY2016 and 1.87% in FY2025. In dollars, merchandise operating contribution rose from $1,026m to $5,060m — a factor of 4.9 — while membership fees rose by a factor of 2.0.
The reason is operating leverage on a fixed cost base. Sales per warehouse rose from $159m to $272m on the company’s own normalised measure while the cost of running a warehouse did not rise proportionally, so SG&A fell from 10.40% of net sales to 9.25% even as Costco raised wages faster than the retail industry. The consequence is that Costco today is more genuinely a retailer, and less purely a subscription business, than it was in 2016. That is a better business — and a more exposed one, because merchandise profit can be competed away and a fee cannot.
Sales per warehouse — the density that pays for the price gap
$ millions, Costco’s own normalised measure (first-year sales annualised, 53-week years adjusted). FY2025 10-K, Item 5.
Gross margin and operating expense — the spread is the story
% of net sales, FY2016–FY2025. The FY2022 dip in both lines is gasoline at ~14% of sales, not an operating change.
Compensation and benefits is the largest expense after merchandise itself. Costco raised the US and Canada starting wage to at least $20.00 an hour in March 2025 and lifted the top of its wage scales by $1.00, bringing the average US hourly rate to approximately $32.00 at FY2025 year-end. Its stated philosophy is not to minimise wages and benefits, and it acknowledges this may cause it to absorb costs other employers would pass through. Retention was approximately 94% for staff with more than a year of service. Note that fresh-foods and certain ancillary labour sits in merchandise costs rather than SG&A, so the reported expense ratio understates the true labour bill.
Cash conversion is exceptional and comes from the payables cycle rather than from margin. Inventory turned 13.0 times, or every 28 days, and Costco states it often sells inventory before it is required to pay for it while still taking early-payment discounts. FY2025 operating cash flow was $13,335m against $5,498m of capital expenditure, leaving $7,837m of free cash flow. Through 36 weeks of FY2026 operating cash flow reached $11,133m — but $2,498m of that was an accounts payable source against $604m in the prior year, which management attributed to faster inventory turns and improved payment terms with suppliers. That is a balance sheet stretch, and it does not repeat at the same size. Capital expenditure is guided to approximately $6,500m for FY2026, with a new emphasis on expanding the depot network; the maintenance-versus-growth split has never been disclosed.
| Use | Approx. total | What it reveals |
|---|---|---|
| Capital expenditure | $35.9bn | More than half of all discretionary cash went into the ground. The warehouse comes before everything. |
| Dividends | $27.6bn | Of which roughly $14.2bn was three special payments — $7.00/sh May 2017, $10.00 Dec 2020, $15.00 Jan 2024 — alongside an ordinary dividend raised every April, $0.45 (2016) to $1.47 (April 2026). |
| Share repurchases | $4.9bn | Not a capital return programme. Shares outstanding rose from 437.5m to 443.2m — buybacks have not even offset equity compensation dilution. |
| Acquisitions | $2.0bn | Innovel (final-mile delivery, 2020) and the Taiwan minority buyout (2022). Nothing else of size. |
| Net debt paydown | ~nil | Total debt $5,161m in FY2016, $5,788m in FY2025. The balance sheet is deliberately unused: ~$14.2bn net cash at Q3 FY2026, all debt fixed rate. |
The behaviour describes management that treats the share count as housekeeping, refuses to lever the balance sheet, and hands back what it cannot deploy in a form that makes no commitment about the future. The same conservatism shows in incentives: the chief executive’s maximum cash bonus for FY2026 was set at $1.12m, split between sales, pre-tax income and environmental and social targets (Form 8-K, 20 October 2025). No transaction has been announced and not yet closed as of the most recent filing.
Costco is a low-cyclicality business on the evidence of the last recession, but it is not at a low point in its own cycle — and the reported figures and the underlying figures are pointing in opposite directions.
| Measure | FY2024 | FY2025 | FY2026 | Read |
|---|---|---|---|---|
| Comparable sales, reported | +5% | +6% | +8.4% | A ten-year high |
| Comparable sales, ex-gasoline and currency | +6% | +8% | +6.6% | Below FY2025 — decelerating |
| Shopping frequency | — | +5% | +3% → +3% → +2% | Q1 → Q2 → Q3 FY2026 |
| Membership fee growth | — | +10% | +14% → +14% → +11% | The Sept-2024 increase lapping |
| Core merchandise gross margin, % of core sales | — | +16bp | +30bp → +22bp → −9bp | First negative quarter of the year |
Costco FY2024 and FY2025 10-Ks; FY2026 Q1–Q3 10-Qs; August 2026 sales release. Gross margin of 11.12% in FY2025 sits near the top of a ten-year range running from 11.35% (FY2016) to 10.48% (FY2022).
The honest reading: Costco is at or near a peak on reported metrics, decelerating on every underlying one, and drawing an unusual amount of its headline growth from two variables it does not control.
Roughly 55% of net sales is food — foods and sundries at 40.6% plus fresh foods at 14.1% — which is the most defensive category in retail. The US and Canada produce 86% of net sales and 84% of operating income, and California alone 26% of US net sales, a concentration Costco names as a risk in its own right.
The 2008–10 evidence is the most useful outside data available. Costco’s total comparable sales fell 4% in FY2009 and its US comp 2%, but the reported decline was substantially gasoline deflation and currency. BJ’s merchandise comps excluding gasoline held at +4.0% in the recession year while Walmart’s US comp fell 0.7% — a spread of nearly five points in the club format’s favour. Sam’s Club segment operating income fell only 8.1% peak to trough. Most tellingly, membership fee income never declined at either company: Costco’s ran $1,506m → $1,533m → $1,691m through the worst of it, and BJ’s $175.1m → $179.6m → $190.7m. Merchandise comps cycle; the annuity does not.
The plausible downside is therefore not a demand collapse but a forced choice. In a period of cost inflation Costco elects not to pass through — which is what its stated pricing philosophy commits it to — it must either hold price and accept lower gross margin, or hold margin and accept slower comps. BJ’s is visibly making the first choice already: its merchandise gross margin fell 20 basis points in Q2 FY2026 on what it called continued investments in pricing, and Costco’s own core merchandise margin has already turned negative. On a business whose entire merchandise operating contribution is 1.87% of net sales, a sustained 20 basis point give-back is roughly $540m — about eleven percent of that contribution.
The physical constraint is unit growth. Costco added twenty-five net warehouses in FY2026, 2.7% of the base, and trimmed the plan during the year — from thirty-three openings implied at Q1 to twenty-nine at Q3. It added a constraint to its FY2025 risk disclosure that did not appear before: difficulty securing long-term utility contracts for new buildings, given growth in global electricity demand and water stress. Unit growth is already the smallest of the three main levers; a binding siting or utility constraint removes the only one that does not depend on charging existing members more.
| What to watch | Where it is published |
|---|---|
| Comparable sales excluding gasoline and currency | Costco monthly sales release, investor.costco.com |
| Shopping frequency versus average ticket | Quarterly 10-Q, management’s discussion of net sales |
| Core merchandise gross margin, % of core sales | Quarterly 10-Q, gross margin basis-point bridge |
| Renewal rate, US and Canada and worldwide | Quarterly 10-Q and earnings release |
| Executive members as % of paid members | Quarterly earnings release supplement |
| Accounts payable against merchandise inventories | Quarterly 10-Q balance sheet |
| US food-at-home CPI; retail average hourly earnings | Bureau of Labor Statistics, monthly |
Cyclicality is covered above and is not repeated. What follows is what cyclicality does not capture — and the first two compound with each other, because both attack the merchandise half of the profit at the moment the merchandise half has become the growing half.
On 20 February 2026 the Supreme Court held in Learning Resources v. Trump that the International Emergency Economic Powers Act does not authorise the President to impose tariffs, invalidating the programmes issued under it — so refunds exist. In March 2026 four class actions were filed against Costco, in the Northern District of Illinois, King County Superior Court, the District of Puerto Rico and the Western District of Washington, asserting that refunds of tariffs Costco paid and passed on to members through higher prices belong to the members. BJ’s has already recognised tariff refund benefits in its gross margin; Walmart states it has recognised none; Costco discloses no receivable and only an immaterial accrual. The mechanism is a one-off margin benefit a direct competitor books and Costco may be obliged to hand back — on a business earning 3.85% at the operating line.
Amazon’s North America segment earned a 6.9% operating margin in 2025 against Costco’s approximately 3.85%, and its subscription revenue of $49.6bn grew 14.1% — 9.3 times Costco’s entire membership fee income, growing faster. US e-commerce reached 17.1% of retail sales in Q2 2026, compounding at 12.2% against 6.7% for total retail, taking roughly 0.8 points of share a year (Census Bureau). Every structural advantage in Section 3 is a defence against store-based competitors. Against a higher-margin operator with a larger membership annuity and no fourteen-acre land requirement, the only relevant defence is the price gap itself — and price gaps are funded from a 1.87% merchandise spread.
The decade’s margin improvement came from spreading fixed warehouse cost over rising volume per box, and new units join that base well below the mature average. If sales density stops rising, the same mechanism runs the other way, on an expense base that is structurally rigid. This is the risk the strong FY2016-to-FY2025 record makes hardest to see.
The March 2021 permanent wage increase alone cost approximately $400m annualised, and Costco has raised wages in most years since, reaching a $20.00 starting rate and approximately $32.00 average US hourly rate. Retail average hourly earnings rose 3.2% in the year to August 2026 while food-at-home prices rose 2.7% (BLS) — labour cost outrunning grocery price inflation. Costco has explicitly committed to absorbing costs other employers pass through. On a 9.25% expense ratio, sustained real wage growth is a permanent headwind that cannot be managed away without abandoning the labour model that produces 94% retention.
Two US increases in a decade, seven years apart, and the second is fully lapped. The US and Canada renewal rate slipped from 92.3% at FY2025 year-end to 92.2% by Q3 FY2026, which Costco attributes to a higher number of memberships sold online, including through digital promotions, that renew at a slightly lower rate. The mechanism matters more than the ten basis points: the cheapest channel for adding members is producing a structurally lower-quality member, and paid household growth is increasingly coming through it.
Costco states that Kirkland Signature products generally carry higher margins than national brands and represent a growing portion of overall sales, and names loss of member acceptance of the brand as a risk to sales and gross margin. It has never disclosed the penetration percentage or the margin differential in any filing in the ten years reviewed, so an investor cannot size the exposure. Two consumer class actions filed in late 2025 allege Kirkland Signature tequila was mislabelled; the dollar exposure is not quantified.
These are findings, not omissions. Each would need resolving before an investor could size the business properly.