Costco
Thesis
- Moat:
- Member loyalty (90%+ membership renewal).
- Economy of scale / cost leadership. Scale at the store level. Fewer SKUs and stronger price control / tariff response capability. Own most buildings.
- Economics:
- fast inventory turnover,
- negative working capital.
- Growth drivers:
- New warehouses,
- international expansion,
- paid households,
- shopping frequency (decelerating),
- executive membership upgrade (capped),
- periodic membership fee increases.
- Risks:
- Competition from Amazon with a higher margin and carrying no real estate.
- Decelerating shopping frequency growth.
- Tightened grid is a headwind to unit growth.
