Costco (yours or your mom & dad’s favorite $420B warehouse retailer) is really a country club cosplaying as a store. Here’s how it becomes a $800B biz.

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here 😉.

Costco (the $420B warehouse club that's secretly a membership biz) had a solid fundamentals year and the stock doesn't care, only +4% over the last 12 months. The S&P 500 +17% during the same time. 

This is a beloved store with customers who pay for the privilege to shop there, but in a tightening economy shoppers aren’t buying as much and at thin margins growth is slowing.

Link to Costco's FY 2026 earnings (10-K, filed 10/7/26, SEC EDGAR)

(GAAP, most recent FY each, fiscal years not aligned)

(1) Walmart doesn't break out a pure Sam's Club fee figure. Definition uncertain. Sam's fiscal year and BJ's ended Jan 31, 2026. Sources: Costco FY26 10-K, Walmart FY26 10-K, BJ's FY25 10-K.

Nothing's broken here. Solid growth, but the greatest question every investor is asking
Is it worth 46 years of earnings/cashflows?

Founded:

Aha Moment:

Growth:

Model:

Where We Are Now:

Here's how we're turning Costco's $65 card into $1B+ of new profit. 

I love this biz model. Costco charges you to shop and customers LOVE it. It’s seen as a rite of passage into homeownership.

50% of Costco's Profits come from Memberships. A 98% Margin business.

But just like Cell carriers and Netflix it’s time to open access up to the whole family.

The current limitations of the Costco Membership:

That's it. Kid moves out? Out. Parents live 10 min away? The membership doesn’t extend.

Sam's Club has a simple upsell to 8 add-on cards for ~$55 each. Costco sells 0.

There will be some cannibalization, but the increase in Revenue from existing customers will be well worth.

We can use Netflix as a case study who had the exact same problem. 

It killed password sharing in May 2023 and sold "extra members" on existing plans instead. That quarter: +5.9M subs. Same quarter a year earlier: -1.0M.

The move: Costco Family. Parents buy the plan. Every adult kid, grandparent, whoever, gets their OWN card w/ their own photo. Any address. Starting at ~$40/ new member all charged to the existing membership.

Mom & Dad pay for the whole family for maybe $200-300/yr.

The real trick: everyone's spend counts toward the parent's Executive 2% reward. Now every family plan sells the $130 upgrade too.

The math: 5% of members add 1 person at $35-45 = $147M-$189M a year. 10% = up to ~$378M at 98% margins that flow straight to the bottom line.

Under-40s are already 1/4 of the base and has grown ~60% since COVID. Management says they start out spending less, then grow into it. Get them on mom's plan at 22. Make them Executive at 32.

Takeaway:  Family plans are the greatest recurring cash printers in Biz history.

Costco's ad biz is tiny, but they have one of the most valuable consumer bases in the entire world. Upper middle class American consumers + small business owners that operate in their closed ecosystem.

Costco doesn't report a dollar of it. BMO guessed ~$225M for 2023. 

Costco already has the best ad inventory available: The App.

Costco recommendation carousels drove ~$500M of online sales in Q3 FY26. They convert at ~3x normal product viewing.

And the app already has Lists. Nobody's selling the slot next to them.

The move: "Your Costco Run." A brief that hits your phone before your usual trip day. What's on your list. What's new in YOUR warehouse this week. Plus 2-3 sponsored "goes with your list" picks.

Sell it the most to the brands who need it most. Newly launching brands who are investing in the channel.

Costco runs under 4,000 items per warehouse. New items rotate in for 8-10 weeks. The rotation IS the ad inventory. A fresh pool of advertisers every 2 months looking to launch and make a big splash in the channel.

Roadshows prove it. GEN Korean BBQ ran one in the Northwest and walked out w/ commitments from ~60-70 more warehouses.

It’s also a self-fulfilling flywheel where Costco 

The math: 0.3% of sales = ~$0.9B (anchored against Walmart’s ~0.9% est.) would add another ~$1B in high margin profits (11% of ‘26 total profits) to Costco bottom line.

There are so many other ways to monetize memberships outside of physical products. Costco just needs to start tapping into delivering high value deep discounts to their customers.

Takeaway: Costco already knows what's on your list. Sell the slot next to it.

Despite Costco putting Asia growth on pause it is VERY popular in Asia.

Costco Korea: 20 stores. 7.32T won in rev (+12%). Operating profit +16.5%. In FY24 each store did ~9x the sales of a Lotte Mart store.

Taiwan has 4 of the top 10 Costcos on the planet.

Costco's FY27 plan has 33 new store openings. 0 in Asia. After FY26 which added 0 net new in Asia too.

Sam's doesn't build. It rents. Local developers, a lot of them state-owned, build the box. Sam's moves in.

Costco owns 119 of its 175 warehouses. It’s not like THEY HAVE TO BE landlords to make the model work.

Before local companies copy the model and make it more efficient Costco should blitz a JV model with as many players in the region.

Scaling up memberships is what matters. At a certain point this is a game of population mapping.

Takeaway: When early tests work. Find ways to make new markets work.

Every time I look at a retailer, I ask the same question. 

Can you actually make money selling physical goods?

Costco intentionally runs at the thinnest margin possible, but no retailer really makes their money from selling the goods.

It’s such a fascinating market where the overwhelming majority of players don’t make money (Brand side as well). Some brands have breakout exs. but there’s a LONGGGG list of no profit bizs that are left in the trail.

The real biggest wins always seem to be selling access or a process to other bizs on how to convert customers.

But I’m still looking for great examples of who can actually make money selling stuff?