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Costco Wholesale Corporation: Annual Report Analysis

By: Christopher Wiesler


Costco Wholesale Corporation, with its inception in 1983 in Seattle, Washington, has been a leading figure in the membership warehouse sector. The company's primary mission revolves around offering its members quality goods and services at the most competitive prices. By adhering to its Code of Ethics, which includes obeying the law, taking care of members and employees, respecting suppliers, and rewarding shareholders, Costco has managed to thrive even in challenging business environments.

Key Financial Highlights:

In the fiscal year 2022, Costco reported net sales totaling $222.7 billion, marking a 16% increase.

The company witnessed a comparable sales growth of 14%.

Net income for the fiscal year stood at $5.8 billion, translating to $13.14 per diluted share, an increase of 17%.

Revenue generated from membership fees saw a 9% rise, amounting to $4.2 billion.

Operational Insights:

  • The past year posed challenges due to inflationary pressures in commodities, labor, and transportation. However, Costco's buying staff worldwide showcased resilience by developing strategies to mitigate these impacts.

  • The company's business model, which includes limiting SKU counts and focusing on high-volume goods, has proven effective in navigating these challenges.

  • With the pandemic's effects waning, Costco accelerated the opening of warehouses and business centers both domestically and internationally. This includes 23 new locations spread across the U.S., Canada, Mexico, Korea, Japan, Spain, France, Australia, and China. Furthermore, post the fiscal year 2022, Costco expanded its operations to New Zealand and Sweden.

  • The Kirkland Signature™ brand experienced robust global growth. New product introductions included BBQ pellets, women's jeans, reformulated dog food, sauté pans, fresh mini cakes, and chicken yakisoba.

  • E-commerce has been a significant focus for Costco. The company reported a 10% sales growth in its e-commerce segment in fiscal 2022, building on a 44% increase from the previous year. The growth is primarily attributed to items like furniture, TVs, mattresses, and appliances.

Employee and Sustainability Initiatives:

Recognizing the pivotal role employees play in the company's success, Costco introduced several wage increases and additional benefits for the majority of its workforce in 2022.

On the sustainability front, the company is making strides with its Climate Action Plan, reducing packaging and plastics use, and optimizing transport to fit more products.

Market Presence:

As of August 28, 2022, Costco operated 838 warehouses worldwide, with a presence in countries like the U.S., Puerto Rico, Canada, Mexico, Japan, U.K., Korea, Taiwan, Australia, Spain, France, China, and Iceland.

The company also operates e-commerce websites in the U.S., Canada, Mexico, U.K., Korea, Taiwan, Japan, and Australia.

Forward-Looking Statements:

Costco's forward-looking statements highlight the company's anticipation of future events and developments. These statements encompass areas like net sales growth, changes in comparable sales, price or fee changes, earnings performance, and more. However, these forward-looking statements come with inherent risks and uncertainties that might cause actual events or results to differ from the anticipated outcomes.


Costco's annual report underscores its robust performance in a challenging business environment. The company's commitment to its core values, combined with strategic operational decisions, has enabled it to deliver impressive financial results. As the retail landscape continues to evolve, Costco's focus on e-commerce, sustainability, and employee welfare positions it well for future growth and success.

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