#606 Why Costco Is One of the Best Businesses in the World

— Costco's business model centers on membership fees, ultra-low SKU counts (3,700 vs. Walmart's 140,000), and aggressive supplier negotiations that drive industry-leading pricing power.

— Kirkland Signature private label generates over $52 billion in annual revenue—larger than Best Buy or Kraft Heinz—while maintaining Costco's commitment to 20% cost savings versus national brands.

— The company's cultural discipline resists margin expansion; gross margins have barely moved despite scale advantages, reinvesting gains into lower customer prices and employee retention (5% year-one attrition vs. 20%+ retail average).

— Revenue per warehouse has widened dramatically versus Sam's Club ($200M+ vs. $100M), reflecting Costco's superior execution and customer loyalty even as both use identical warehouse formats.

— International expansion remains deliberately slow; Costco opened its first China store in 2019—two decades after approval—yet rapidly accumulated 400,000 cardholders, five times the US average.

— Stock performance shows ~400x gain since 1982 and ~4x since 2012, driven by consistent 10% annualized EPS growth funded by conservative balance sheet management and special dividends.

— Costco's membership renewal rate of ~90% in the US and Canada signals exceptional customer satisfaction; most members recoup membership fees within a few shopping trips given the 15-percentage-point gross margin advantage over typical retailers.

— The company's refusal to capture margin expansion—despite private label success and scale—demonstrates that long-term shareholder value compounds when management prioritizes stakeholder satisfaction over short-term profit margins.

— International markets like China show explosive early-stage demand (400,000 cardholders in one location) but Costco's methodical rollout strategy prioritizes sustainable execution over rapid expansion, suggesting decades of runway for international revenue growth.