Costco Wholesale Corporation — FY2026 Form 10-K
Reporting period: 52 weeks ended August 30, 2026; comparisons are with the 52 weeks ended August 31, 2025. Amounts are in U.S. dollars unless noted.
Business context
Costco operates membership warehouses and e-commerce sites. Its low-price, limited-selection model relies on high sales volumes, rapid inventory turnover, and membership revenue. At year-end, it operated 939 warehouses, up from 914, and employed 355,000 people. Digitally enabled sales represented 11% of net sales; gasoline represented 11%.
Financial performance and liquidity
| Metric | FY2026 | FY2025 | Change |
|---|---|---|---|
| Net sales | $297.247 billion | $269.912 billion | +10% |
| Total revenue, including membership fees | $303.154 billion | $275.235 billion | +10% |
| Membership fee revenue | $5.907 billion | $5.323 billion | +11% |
| Operating income | $11.685 billion | $10.383 billion | +13% |
| Net income | $9.226 billion | $8.099 billion | +14% |
| Diluted EPS | $20.76 | $18.21 | +14% |
| Gross margin percentage | 11.09% | 11.12% | -3 basis points |
| SG&A as percentage of net sales | 9.15% | 9.25% | -10 basis points |
| Operating cash flow | $15.817 billion | $13.335 billion | +$2.482 billion |
| Cash and short-term investments | $21.301 billion | $15.284 billion | +$6.017 billion |
Comparable sales rose 8% (7% excluding foreign-exchange and gasoline-price effects), supported by a 5% increase in average ticket and 3% higher shopping frequency. Digitally enabled comparable sales increased 21%. Net sales benefited from gasoline price increases ($3.501 billion, or 130 basis points) and currency movements ($1.332 billion, or 49 basis points). Excluding gasoline-price inflation, gross margin percentage increased 10 basis points.
Net cash used in investing activities was $6.378 billion, including $6.435 billion of capital expenditures. Net cash used in financing was $3.355 billion. Long-term debt was $6.175 billion, including $2.248 billion classified as current; no short-term borrowings were outstanding at year-end. Management said cash, operating cash flow, and available credit capacity should cover foreseeable liquidity and capital needs.
Material changes versus FY2025
- Net income rose 14%; operating cash flow increased 19%, primarily from higher operating income and reduced net investment in inventory, supported by faster turns and improved supplier payment terms.
- Membership fee revenue increased 11%, reflecting sign-ups, fee increases, and Executive membership upgrades. Worldwide renewal was 89.8%; U.S. and Canada renewal was 92.3%.
- Gross margin percentage declined 3 basis points overall, while SG&A leverage improved by 10 basis points. Faster growth in ancillary and other businesses affected sales mix; core merchandise margin percentage increased 15 basis points.
- Costco opened 28 warehouses, including three relocations, for 25 net additions, versus 27 openings including three relocations in FY2025.
- Cash dividends declared increased to $5.54 per share from $4.92. The quarterly dividend was raised 13%, from $1.30 to $1.47 per share. FY2024 included a $15-per-share special dividend, so financing cash flows are not directly comparable across that period.
Outlook, commentary, risks, and unusual items
- Plans: Management intends to spend approximately $7.5 billion on capital expenditures in FY2027 and plans up to 33 warehouse openings, including five relocations. These are current plans, not guaranteed outcomes. The filing provides no specific earnings or sales-growth guidance.
- Tariff refunds: After the U.S. Supreme Court ruled IEEPA tariffs unlawful, Costco received $184 million in FY2026 refunds: $174 million recorded as a reduction in merchandise costs and $10 million as interest income. It received a further $155 million after year-end and said it intends to invest the majority of refunds in member value. Refunds may be delayed for some transactions.
- Key exposures: U.S. and Canadian operations accounted for 86% of net sales and operating income; California represented 26% of U.S. net sales. Risks include competition, inflation and tariffs, labor and healthcare costs, supplier and distribution disruptions, foreign exchange, weather, cybersecurity and IT execution, and regulatory or legal matters.
- Contingencies: The company reported several pending employment, opioid, privacy, product-labeling, tariff-refund, and marketing-related matters. Management does not expect pending claims, individually or collectively, to materially affect financial position, results, or cash flows, but adverse outcomes could materially affect an individual quarter or year. Certain tax assessments have no estimable loss range.
- Controls and audit: The auditor issued unqualified opinions on the financial statements and internal control over financial reporting. The auditor identified U.S. and Canada revenue audit evidence as a critical audit matter, citing highly automated processing across multiple IT systems; this did not modify the audit opinion.
Most important facts for investors to verify
- Whether comparable-sales momentum, renewal rates, and Executive-member penetration remain strong, and whether growth continues to convert into earnings and cash flow.
- How gross margin and member pricing respond to gasoline-price changes, tariffs, refund timing, and merchandise-cost inflation.
- FY2027 capital spending and warehouse-opening execution, including returns on new locations and potential cannibalization.
- Debt maturities, particularly $2.25 billion due in FY2027, alongside planned investment and dividend commitments.
- Developments in material litigation and tax matters, and the effectiveness of cybersecurity and revenue-processing controls.