Costco Wholesale Corporation (COST): Business Model Canvas [Dec-2025 Updated]

You're looking at one of retail's most durable models, and honestly, it's simpler than most think: sell a ton of stuff cheap, and make your real profit from membership fees. For the fiscal year 2025, this strategy kept their 81 million paid households fiercely loyal, evidenced by a 92.3% U.S./Canada renewal rate, while pushing total net sales to $269.9 billion. The magic lies in keeping markups tiny-around 14% over cost-which forces extreme operational efficiency across their 914 global warehouses. Below, I've broken down exactly how Costco Wholesale Corporation executes this cost-leadership masterclass across all nine building blocks of their Business Model Canvas.

Costco Wholesale Corporation (COST) - Canvas Business Model: Key Partnerships

You're looking at the critical external relationships that allow Costco Wholesale Corporation to deliver its unique bulk-value proposition. These partnerships are essential for everything from stocking the shelves to getting that massive flat-screen TV to your door. Honestly, the scale of these relationships is what keeps the membership fee so compelling.

Global network of high-volume product suppliers

Costco Wholesale Corporation relies on a curated network of suppliers, often favoring those who can meet high volume demands to maintain low per-unit costs. The company emphasizes local sourcing for its Kirkland Signature brand where possible to mitigate tariff impacts and control costs.

• Kirkland Signature sales growth has been reported as outpacing overall sales growth in fiscal 2025.
• Costco Wholesale Corporation reported fiscal year 2025 net sales of $269.9 billion.
• The company operates 914 warehouses worldwide as of the end of fiscal 2025, with plans for 24 net new buildings in that year.
• Costco Wholesale Corporation operates 918 warehouses worldwide as of October 2025.

Financial institutions for co-branded credit cards (e.g., Visa)

The co-branded credit card partnership is a massive revenue and loyalty driver. The relationship with the card issuer and the network (Visa) is central to member spending outside the warehouse.

Partner Type	Specific Entity/Network	Key Financial/Statistical Data (as of late 2025)
Co-branded Issuer	Citi (for Costco Anywhere Visa Card)	Variable APR for purchases/balance transfers: 18.99% - 26.99% (based on 7% Prime Rate as of 12/01/2025).
Card Network	Visa	Holds 50% market share by transactions in the US credit card market in 2025.
Card Benefit	Costco Anywhere Visa Card	No Foreign Transaction Fees.

Last-mile delivery services (e.g., Instacart, Uber Eats)

Costco Wholesale Corporation has deepened its relationship with Instacart to power its same-day delivery options, specifically targeting its most loyal members with new incentives.

• Costco first partnered with Instacart for same-day delivery in 2017.
• Starting June 30, 2025, Executive Members in the US and Canada receive a $10 monthly credit on Instacart-delivered orders of $150 or more.
• Instacart powers Costco's same-day delivery websites: sameday.costco.com and sameday.costco.ca.
• In mid-2025, Costco expanded options on the Instacart platform to include No-Rush Delivery and Priority Delivery.

Logistics and technology firms for supply chain optimization

Costco Wholesale Corporation uses internal logistics capabilities, bolstered by acquisitions, alongside technology partners to manage the flow of goods, especially for large items.

The company's own logistics arm, Costco Logistics, is a key partner in its digital strategy.

• Costco acquired Innovel Solutions, a middle and last-mile delivery and installation carrier, for $1 billion.
• Items delivered through the Costco Logistics program saw a 13% year-over-year increase during the fourth quarter of fiscal 2025.
• Digitally enabled sales for Costco Wholesale Corporation amounted to more than $27 billion for fiscal 2025.
• Supply chain technology trends in 2025 show high adoption of Artificial Intelligence (AI) at 71% among vendors, tied for No. 1 with optimization solutions.

Real estate developers for new warehouse construction

While specific developer names aren't always public, the scale of Costco Wholesale Corporation's physical expansion dictates significant partnerships in real estate acquisition, development, and site preparation.

The company's expansion pace is a direct measure of this partnership activity.

Metric	Value (Fiscal Year 2025)	Source Context
Total New Buildings Planned (FY2025)	24 net new buildings	Total expected openings including relocations.
Total Warehouses Worldwide (as of late 2025)	918	Reported operating count as of October 2025.
Capital Expenditures (FY2024, indicative)	$4.71 billion	Dedicated to property, plant, and equipment, showing investment scale.

You should check the Q1 FY2026 earnings call transcript, scheduled for December 11, 2025, for any immediate updates on new site acquisitions or developer contracts.

Costco Wholesale Corporation (COST) - Canvas Business Model: Key Activities

The Key Activities for Costco Wholesale Corporation are deeply intertwined with its low-price, high-volume, membership-driven model. These activities focus relentlessly on operational efficiency to support the core value proposition of offering the lowest possible prices.

Large-scale, Centralized Procurement and Bulk Buying

Costco Wholesale Corporation's procurement is centralized to maximize buying power. This scale allows the company to negotiate aggressively with suppliers, which is fundamental to maintaining its famously low markups. The strategy relies on offering a limited selection of items-Costco stocks approximately 4,000 items in its warehouses-to simplify logistics and increase the volume purchased for each Stock Keeping Unit (SKU).

The financial results from fiscal year 2025 underscore the success of this high-volume approach:

Metric	FY2025 Value
Total Net Sales	$269.9 billion
Membership Fee Revenue	$5.3 billion
Net Income	$8.1 billion

Efficient Warehouse Operations and Inventory Management

Operational efficiency is achieved through a no-frills, self-service warehouse format that minimizes handling and overhead. This discipline allows Costco Wholesale Corporation to operate profitably at significantly lower gross margins than traditional retailers. A key indicator of this efficiency is inventory turnover, which peaked in August 2025.

The speed at which inventory moves is critical to the model. Here's a look at the inventory metrics for the fiscal year ending August 31, 2025:

• Inventory Turnover (LTM, August 2025): 13.1x
• Inventory Turnover (Quarterly, ending 2025-08-31): 4.14
• Total Inventory (FY2025): $18.116B

The company also continues to invest in technology to support these operations, including testing Scan & Go pilots and implementing digital enhancements like passwordless sign-in for its mobile app.

Membership Acquisition and High-Retention Management

Membership fees are the primary driver of operating profit, acting as a low-cost source of capital that subsidizes the low product margins. The focus is on acquiring members and ensuring they renew their annual subscriptions. The total paid membership base showed solid growth through FY2025.

Membership performance highlights include:

• Total Paid Members (as of late 2025): Reached 81 million
• Worldwide Paid Membership Renewal Rate (Q3 FY2025): 90.2%
• U.S. and Canada Paid Membership Renewal Rate: Around 90%
• Executive Members (Q4 FY2025): 38.7 million, representing 47.7% of paid members

The company enhanced member value by rolling out Buy Now, Pay Later for big online purchases through Affirm and offering executive member exclusive hours.

Developing and Sourcing Kirkland Signature Private Label Products

Developing the Kirkland Signature private label is a core activity that drives both value perception and margin control. These products are intentionally sourced to offer quality comparable to national brands but at a significant discount, typically offering members 15% to 20% value compared to national brand alternatives.

The penetration of the private label continues to be a significant factor in sales performance:

Metric	Latest Reported Value
Kirkland Signature Penetration (Q1 FY2025)	Just under 33% of sales
Kirkland Signature Sales (Estimated 2024)	$74.6 billion
Kirkland Signature Margin Benefit	Typically carry higher margins than national brands

The 30th anniversary of Kirkland Signature was noted in late 2025, coinciding with the addition of over 30 new items in Q4 alone.

Strategic Global Expansion, Opening 28 New Warehouses in FY2025

Costco Wholesale Corporation actively pursues strategic global expansion to increase member reach and leverage economies of scale further. While the plan targeted 28 new warehouses, the actual execution in fiscal year 2025 resulted in a specific net increase to the global footprint.

Expansion metrics for the fiscal year ending August 31, 2025:

• Total Global Warehouses (End of FY2025): 914 locations
• Net New Warehouses Opened in FY2025: 24 net new buildings
• New U.S. Locations Opened (FY2025): 15
• New International Locations Opened (FY2025): 7 net new

The company is already planning for the next fiscal year, with plans to open 35 additional locations in fiscal 2026.

Costco Wholesale Corporation (COST) - Canvas Business Model: Key Resources

You're looking at the core assets that make Costco Wholesale Corporation tick, the things they own or control that let them deliver on their value promise. Honestly, it's a mix of physical assets, intellectual property, and financial muscle that few retailers can match.

The physical foundation is massive. Costco Wholesale Corporation's global real estate footprint is anchored by a significant number of warehouses. As of the latest reports covering fiscal year 2025, the company operated 914 warehouses globally, with an update showing 918 warehouses worldwide as of October 2025.

• United States and Puerto Rico: 629 locations
• Canada: 110 locations
• Mexico: 42 locations
• Japan: 37 locations
• United Kingdom: 29 locations

The membership base is the engine, providing predictable, high-margin revenue. Costco Wholesale Corporation boasts a loyal, recurring membership base of 81 million paid households as of the end of fiscal year 2025. That loyalty shows up in the renewal rates, which are incredibly sticky: around 90% in the United States and Canada, with the global rate holding near 89.8%.

The highly recognized Kirkland Signature private label brand is a resource that drives both margin and differentiation. While the brand has over 500 Kirkland Signature products as of late 2025, its financial impact is huge. In fiscal year 2024, these products accounted for an estimated $86 billion in sales, representing about one-third of total revenue, and analysts project this share to be between 25-30% of total revenue in 2025. This brand allows Costco Wholesale Corporation to keep its markups low while maintaining quality.

Underpinning the physical stores is an efficient, high-volume logistics and distribution system. This system supports not just in-store sales but also a growing digital channel. E-commerce sales for fiscal year 2025 topped $19.6 billion, with digitally enabled sales surpassing $27 billion for the same period. That scale helps keep costs down across the board.

Finally, you look at the balance sheet, which is definitely strong. This financial health allows for aggressive reinvestment and weathering economic bumps. Here's the quick math on the fiscal year 2025 operational performance and liquidity as of August 31, 2025:

Financial Metric	Amount (FY 2025)
Net Cash from Operating Activities	$13,335 million
Cash and Cash Equivalents (End of Period)	$14,161 million
Capital Expenditures (Investments)	Just under $5.5 billion
Long-Term Debt (Excluding Current Portion)	$5,713 million

The net cash position increased by nearly $4,255 million during the year, giving the company immense financial flexibility moving into 2026.

Costco Wholesale Corporation (COST) - Canvas Business Model: Value Propositions

Costco Wholesale Corporation delivers value through a disciplined, high-volume, low-margin strategy anchored by its membership model. This approach translates directly into tangible savings and exclusive benefits for members.

High-quality, brand-name, and private-label goods at ultra-low prices

• Kirkland Signature products typically offer members 20% to 30% value compared to national brand alternatives of equal quality.
• Kirkland Signature generated approximately $86 billion in annual sales, accounting for about one-third of the company's total revenue in 2025.
• The company stocks a limited assortment, focusing on approximately 4,000 SKUs globally.

Low product markups, capped at approximately 14% over cost

Costco Wholesale Corporation enforces strict internal limits on how much it marks up merchandise over cost. This is a core differentiator from traditional retail models.

Product Type	Maximum Markup Cap Over Cost
Third-Party Brand-Name Products	14%
Kirkland Signature Private-Label Products	15%

For comparison, even discount retailers like Walmart commonly mark up items by 25%, while department stores often use a 100% markup.

Exclusive access to a curated selection and treasure-hunt shopping experience

The limited selection drives volume on key items, which supports the low-markup strategy and creates the sought-after 'treasure-hunt' feel. The focus on high-volume items means that Kirkland Signature products can account for a significant portion of sales in specific categories; for instance, one 2025 study estimated 32% of sales across 10 major categories came from Kirkland products.

Convenience of bulk purchasing and ancillary services (gas, pharmacy)

Ancillary businesses provide added convenience and drive traffic, complementing the core merchandise offering. In fiscal year 2025, sales in warehouse ancillary and other businesses increased by $1,201 million, representing a 2% increase.

• Executive Members earn a 2% reward on qualified purchases, generally up to a maximum reward of $1,250 per year.
• Select locations began offering exclusive 9 a.m. shopping hours for Executive Members starting in June 2025.

High member value, evidenced by a 92.3% U.S./Canada renewal rate

Membership fees are the primary driver of net operating income, making retention paramount. The high renewal rate confirms members perceive the value proposition outweighs the annual fee.

Metric	Rate / Amount (Late 2025)
U.S. and Canada Membership Renewal Rate	92.3%
Worldwide Membership Renewal Rate	89.8%
Total Paid Members (Q4 2025)	81 million
Executive Members (Q4 2025)	38.7 million
Membership Fee Revenue (FY 2025)	$5.32 billion

The Executive tier, which carries a higher fee, saw its penetration grow to nearly 47.7% of total paid members in Q4 2025.

Costco Wholesale Corporation (COST) - Canvas Business Model: Customer Relationships

You're looking at the core engine of Costco Wholesale Corporation's value proposition, which is entirely built around its membership structure. Honestly, the relationship isn't transactional; it's a long-term commitment that drives nearly all the company's operating profit.

Membership-based exclusivity and loyalty program

Costco Wholesale Corporation maintains exceptional customer stickiness through its paid membership tiers. As of the end of fiscal 2025, the company served approximately 81 million paid members globally. This base demonstrates remarkable loyalty, evidenced by the worldwide renewal rate holding steady at 89.8%, while the rate in the United States and Canada was even stronger at 92.3%. The company operates 914 warehouses worldwide as of August 31, 2025, with the US segment accounting for about 73% of total revenue.

The relationship is segmented to encourage higher spending and commitment, which you can see clearly in the tier structure:

• Gold Star and Business Membership annual fee: $65.
• Executive Membership annual fee: $130 as of August 2025.
• Total Executive Members as of fiscal 2025 year-end: 38.7 million.

The focus on the higher tier is clear: Executive members accounted for nearly 47.7% of total paid members but drove 74.2% of worldwide sales in fiscal 2025. That's a massive concentration of spending power in the top tier.

Executive Membership with a 2% annual reward check

The primary draw for the Executive tier is the 2% annual reward on qualified purchases. This benefit is designed to incentivize spending that easily offsets the higher fee. For instance, it takes about $3,250 in annual spending to recoup the $65 upgrade cost from a Gold Star membership. The reward structure was recently enhanced:

Metric	Value for Fiscal 2025 Data
Executive Membership Annual Fee	$130
2% Reward Earning Rate	2% on pre-tax qualified purchases
Maximum Annual Reward Cap	$1,250
Executive Member Share of Worldwide Net Sales	Approximately 73.6% to 74.2%

The maximum reward cap was increased from $1,000 to $1,250 in September 2024, which came alongside a 5% increase in all membership fees. The company is actively using these benefits to drive upgrades; membership fee income rose 14% year-over-year in the fourth quarter of fiscal 2025, reaching $1,724 million.

High-touch service for ancillary businesses (optical, travel)

While the core relationship is self-service in the warehouse, Costco Wholesale Corporation layers on high-value, service-oriented perks to reinforce the Executive relationship. These services are often integrated into the 2% reward calculation for qualifying purchases. To further incentivize the top-tier members, new benefits were rolled out, which you can see as targeted relationship builders:

• A $10 monthly credit on eligible online orders over $150, which applies to Costco's digital channels, including Costco Travel bookings.
• Exclusive early shopping hours, starting at 9 a.m. on weekdays and Sundays, effective September 1, 2025.

These service enhancements are aimed at the highest-spending cohort, who are already spending 3 times more on average than a basic member.

Automated self-service via e-commerce and mobile app

The relationship extends beyond the physical warehouse through digital channels, which are critical for younger members who now make up nearly half of new sign-ups. Costco Wholesale Corporation is successfully blending its bulk model with digital convenience. Digitally-enabled sales, which include Costco Travel, represented about 10% of total net sales in 2025. The e-commerce segment showed strong momentum, with online sales growing 13.6% in the fourth quarter of fiscal 2025. The company is actively promoting auto-renewal features and enhancing targeted digital communication to improve retention, especially among newer, digitally-acquired members.

Costco Wholesale Corporation (COST) - Canvas Business Model: Channels

You're looking at how Costco Wholesale Corporation gets its value proposition into the hands of its members, and honestly, it's a masterclass in omnichannel presence, heavily weighted toward the physical experience.

The primary channel remains the physical warehouse clubs. By the end of Fiscal Year 2025, Costco Wholesale Corporation operated a total of 914 warehouses globally, a testament to its sustained, deliberate expansion strategy. These locations are the core touchpoint, designed with a simple loop corridor from entrance to checkout, often built on tight schedules, sometimes within 110 days. The distribution of these clubs shows where the bulk of the business lies, but also where growth is targeted.

Here's the quick math on the physical footprint as of the end of FY2025:

Region	Number of Warehouses (End of FY2025)
United States and Puerto Rico	629
Canada	110
Mexico	42
Japan	37
United Kingdom	29
Korea	20
Australia	15
Taiwan	14
China	7
Spain	5
France	2
Sweden	2
Iceland and New Zealand (Combined)	2
Total Global Locations	914

To be fair, as of October 2025, the total count was reported slightly higher at 918 warehouses worldwide.

The e-commerce platform is the critical digital extension, and it's growing fast. For the full fiscal year 2025, Costco e-commerce sales grew by 15.6% year-over-year. This digital channel is significant, with sales topping $19.6 billion for FY 2025. Furthermore, when you look at digitally enabled sales, which include third-party delivery services, that figure surpassed $27 billion for FY 2025.

Costco Wholesale Corporation also drives traffic and loyalty through its ancillary services integrated into the warehouse locations. These services are not just conveniences; they are revenue drivers and membership retention tools. For instance, the company extended the hours of its North American gas stations, which helped drive two of the all-time highest gallon weeks in the U.S. in April 2025. The food court remains a powerful draw; in fiscal 2025, the company sold more than 345 million of its iconic $1.50 hot dog combos. Furthermore, ancillary businesses like the pharmacy, optical, and hearing aids all posted strong quarters in FY2025.

The mobile app serves as the digital bridge for the physical experience. It helps members plan their trips and access their membership credentials digitally. A concrete measure of its utility is seen in the usage of its warehouse tool: the feature allowing members to view local warehouse item availability and prices saw more than 43 million visits in Q2 2025 alone.

You can see the multi-pronged approach in action:

• Physical footprint reaching 914 locations by fiscal year-end 2025.
• E-commerce sales growth of 15.6% for the full FY2025.
• E-commerce revenue exceeding $19.6 billion in FY2025.
• Gas stations driving record fuel sales volume in Q2 2025.
• Selling over 345 million hot dog combos in FY2025.
• Mobile app feature receiving over 43 million visits in Q2 2025.

Finance: draft 13-week cash view by Friday.

Costco Wholesale Corporation (COST) - Canvas Business Model: Customer Segments

Costco Wholesale Corporation serves a broad base, segmented primarily by membership type and geographic location, all unified by a pursuit of value in bulk purchasing.

Value-conscious individual consumers and households form the core of the base, subscribing to the Gold Star or Executive tiers to access low-unit pricing on a limited selection of goods. The overall base is substantial, with paid memberships reaching 81 million as of the end of the quarter in late 2025. This segment is highly loyal, evidenced by the U.S. and Canada renewal rate holding at 92.3%.

The Executive Membership tier, which appeals to those who spend more and seek premium perks, is a significant driver of revenue. Executive members grew to 38.7 million in the quarter, representing nearly 47.7% of total paid members. This smaller group generates a disproportionately large share of revenue, accounting for 74.2% of global sales in the fourth quarter of fiscal 2025.

Here are the key membership statistics as of late 2025:

Metric	Value	Source Context
Total Paid Members (Quarter End)	81 million	Q4 2025 Figure
Executive Members (Quarter End)	38.7 million	Q4 2025 Figure
Executive Member Sales Contribution	74.2%	Worldwide Net Sales Q4 2025
US/Canada Renewal Rate	92.3%	Late 2025 Figure
Worldwide Renewal Rate	89.8%	Late 2025 Figure
Gold Star/Business Annual Fee	$65	2025 Annual Fee
Executive Annual Fee	$130	2025 Annual Fee

Small to medium-sized business owners (Business Memberships) are targeted through the Business Membership tier, which shares the standard annual fee of $65, similar to the Gold Star tier. This segment is specifically catered to with the ability to purchase items for resale, differentiating it from the personal Gold Star membership.

The affluent, educated households who travel and seek quality are strongly represented by the Executive Member segment, which receives a 2% annual reward on qualified purchases, capped at $1,250. This group also receives exclusive discounts on services like travel. Costco Travel, a subsidiary, is a key offering for this segment, with digitally-enabled sales, including travel, representing about 10% of total net sales in fiscal 2025. Furthermore, Executive members gained early warehouse access starting at 9 a.m. from June 30, 2025.

Global consumers in 16 countries outside the US are served through Costco's international operations. As of August 31, 2025, Costco operated 914 warehouses globally, with 24 net new warehouses opened in fiscal 2025. The international footprint includes operations in the U.K., Korea, Taiwan, Japan, Australia, Mexico, China, Spain, France, Sweden, Iceland, and New Zealand, in addition to the U.S. and Canada. Revenue from these international markets was substantial in fiscal 2025:

• Other International Operations revenue: $38.26B
• Canada revenue: $36.92B

The International segment contributed significantly to the total fiscal 2025 net sales of approximately $269.9 billion.

Costco Wholesale Corporation (COST) - Canvas Business Model: Cost Structure

Costco Wholesale Corporation operates on a decidedly cost-driven model, relentlessly pursuing extreme operational efficiency to deliver on its core value proposition. This focus means every dollar saved in operations is theoretically passed back to the member through lower prices. The entire structure is designed to support high volume over high margin, a strategy that requires disciplined cost control across the board.

The most significant cost component is the High Cost of Goods Sold (COGS), a direct result of the commitment to low product markups. Costco Wholesale Corporation intentionally keeps its merchandise markups razor-thin to drive volume and reinforce membership value. For fiscal year 2025, the company's philosophy held firm, with product markups generally capped at approximately 14-15% over cost, and Kirkland Signature private label items also capped around 15%.

Here's a look at the scale of sales versus the cost of the merchandise sold for the full fiscal year 2025:

Metric	Amount (Millions USD)	Percentage of Net Sales
Net Sales (FY 2025)	269,912	100.00%
Merchandise Costs (COGS) (FY 2025)	239,886	88.88%
Gross Profit (FY 2025)	30,026	11.12%

The resulting gross margin of 11.12% for fiscal year 2025 is thin, which is why operating efficiency in other areas is so critical. The overall operating profit margin for the full fiscal year 2025 settled at 3.77%.

Significant warehouse operating costs, wages, and utilities form the next major cost block, captured largely within Selling, General, and Administrative (SG&A) expenses. For the full fiscal year 2025, SG&A expenses totaled $24,966 million. This figure reflects substantial investment in human capital; Costco Wholesale Corporation employed 341,000 employees worldwide at the end of 2025 and had increased the starting wage to at least $20.00 per hour in the U.S. and Canada. The SG&A rate for the third quarter of fiscal 2025 rose to 9.16%, which management attributed to higher employee wage investments. The total operating expense (opex) for FY 2025 was reported as $24.97 Billion.

Costco Wholesale Corporation historically maintains minimal advertising and marketing spend, aligning with its philosophy that member savings should replace promotional spending. While the company has historically avoided major platform advertising, it is actively building out a retail media network, using member data to offer personalized advertising to partners. However, the stated purpose of this revenue is not to increase profit margins but to reinvest directly into member value, such as offsetting shipping costs or keeping staple item prices low.

The commitment to physical presence drives substantial capital expenditures for new warehouse openings. For the fiscal year ending August 2025, capital expenditures (CapEx) peaked at $5.498 billion. This investment supported the opening of 27 new warehouses in fiscal year 2025, resulting in 24 net new buildings, bringing the total global warehouse count to 914 as of August 31, 2025. The company projected CapEx between $6,000 to $6,500 million for the following fiscal year, 2026.

• Total warehouses operated worldwide as of August 31, 2025: 914.
• Net new warehouse openings in fiscal year 2025: 24.
• Fiscal year 2025 Capital Expenditures (CapEx): $5.498 Billion.
• Average warehouse space: Approximately 147,000 square feet.

Finance: draft 13-week cash view by Friday.

Costco Wholesale Corporation (COST) - Canvas Business Model: Revenue Streams

The revenue structure for Costco Wholesale Corporation is fundamentally dual-pronged, balancing high-volume, low-margin product sales with high-margin, recurring membership fees. This combination provides both top-line scale and predictable profitability.

Merchandise sales remain the largest component by volume, accounting for approximately ~95% of net sales. This reflects the core business of moving massive quantities of goods at razor-thin margins, which is the primary driver of customer traffic and volume.

The second, and arguably most crucial, stream is the membership fees. This revenue is extremely high-margin and provides the necessary operating income cushion. For fiscal year 2025, membership fees contributed approximately 65% of the total operating income. This high contribution underscores the value of the recurring revenue base.

The financial scale of the merchandise side is evident in the top-line figures for the fiscal year ending August 31, 2025. Total net sales reached $269.9 billion for fiscal year 2025. This figure represents an 8.1% increase over the prior year.

The growth in the fee-based component was strong in FY2025. Membership fee revenue increased 10% in FY2025, reaching a total of $5.3 billion for the year. This growth was supported by a worldwide membership renewal rate hovering near 90.2% and an increase in total paid memberships to 81.0 million.

Beyond the two main pillars, Costco generates revenue from its ancillary service sales, which include gas, food court, pharmacy, and travel. For fiscal year 2025, the sales from warehouse ancillary and other businesses totaled $1,201 million.

Here is a breakdown of the primary revenue components for Costco Wholesale Corporation in fiscal year 2025:

Revenue Stream Component	FY 2025 Financial Amount	Context/Growth
Total Net Sales	$269.9 billion	8.1% increase year-over-year
Merchandise Sales Share of Net Sales	~95%	Implied by low gross margins
Membership Fee Revenue	$5.3 billion	10% increase year-over-year
Ancillary Service Sales (Total)	$1,201 million	Represents approximately 2% of total revenue
Membership Fees Contribution to Operating Income	65%	High-margin profit driver

The structure relies on the following specific revenue-generating activities:

• Selling merchandise at high volume with low markups.
• Collecting annual membership fees, with Executive members driving significant spend.
• Generating revenue from high-traffic ancillary services like the food court and gas stations.
• E-commerce sales, which grew by 15.6% for the year.

To be fair, you need to watch the relationship between the two main streams; the $5.3 billion in membership fees is what allows the company to keep merchandise margins so low, which in turn drives membership loyalty.

Finance: draft the 13-week cash flow view incorporating the $13.335 billion in net cash from operations by Friday.