Stock Profile: Costco

Socially responsible investing (SRI) is the foundation of Clean Yield’s investment strategy. Our SRI strategy includes negative screening, to avoid investments in industries or companies that conflict with our clients’ values, and positive screening, to actively seek out companies making a positive impact. Below is an example of the companies we include in our customized client investment portfolios, with a snapshot of the considerations we review. Stock profiles are not investment recommendations. Learn more about our investment strategy and services.

Costco Wholesale Corporation operates 891 membership warehouses globally, offering a broad selection of nationally branded and private-label products, specialty departments, and exclusive member services, as well as e-commerce sites. Costco is distinguished by its ability to offer high-quality products at low prices, supported by a business model built around membership fees, limited product selection, high sales volumes, and low operating costs. Approximately two-thirds of Costco’s merchandise sales come from food and grocery categories, while membership fees accounted for 51% of operating income in fiscal 2025. The company is also known for its exceptional treatment of employees, with an average annual turnover rate of just approximately 8%, compared with roughly 60% for the retail industry.

Costco’s business model and approach to employees and customers give the company several notable social strengths. Its emphasis on low prices and employee compensation stands out within the retail sector, while its environmental and community programs address food waste, climate emissions, responsible sourcing, and food insecurity.

Current Snapshot: Costco’s No-Frills Model Invests Where It Counts

Costco’s membership model is central to both its financial performance and its ability to provide value to customers. The company earns most of its operating profit from membership fees, allowing it to sell merchandise at near break-even prices. This reinforces Costco’s reputation as a price leader, encourages recurring store traffic, and has helped the company maintain membership renewal rates of approximately 90%. Members are motivated to maximize the value of their annual fee, creating a strong source of customer loyalty and recurring revenue.

Three structural efficiencies underpin this model: scale, merchandising discipline, and minimal overhead. Costco carries only around 4,000 SKUs in its warehouses, versus 100,000 or more at traditional grocers; bulk purchasing reduces inventory handling and provides purchasing leverage; limited store fixtures and modest advertising further reduce overhead. Selling, general, and administrative expenses represent approximately 9% of sales, compared with roughly 20% at Walmart and Target. These efficiencies allow Costco to pass savings directly to members, particularly on grocery products, while maintaining attractive returns.

The model’s limited product selection and rapid inventory turnover contribute to Costco’s operating efficiency. Its private-label Kirkland Signature brand, which accounts for nearly one-third of net sales, further strengthens the model by delivering higher margins while reinforcing the company’s value proposition. The result is an unusually efficient retailer, with sales per square foot exceeding $2,000, strong cash generation, and conservative levels of corporate debt and a strong balance sheet. This financial flexibility gives Costco room to continue investing in international growth while returning capital to shareholders.

Costco’s reputation for its positive treatment of employees includes paying comparatively high wages and benefits. Its minimum wage was recently raised to $20 per hour, and the average wage is approximately $31 per hour. Employee turnover of around 8% is substantially below the industry average, supporting job stability and reducing recruiting and training costs. A July 2026 Wall Street Journal profile of a Costco cashier who has stayed with the company for 40 years illustrates the staying power of its approach.

That same focus on value extends to Costco’s customers. Costco has cultivated a sense of exclusivity through its membership structure while consistently signaling that it prioritizes customer value: Membership fees have historically increased only every five to seven years, and its famous hot dog-and-soda combo has remained $1.50 since 1985. The approximately 90% renewal rate suggests that customers, while notably from an affluent demographic, continue to find the value compelling across changing economic environments.

Social and Environmental Impact Review

Costco has demonstrated a relatively strong commitment to environmental management for a large retailer. The company has committed to using 100% clean electricity by 2035 and to reducing absolute operational emissions by 39% from a 2020 baseline by 2030. As of the end of 2024, clean electricity accounted for 28% of global purchased electricity, and its Scope 1 and Scope 2 market-based emissions fell between 2023 and 2024. Costco is also working to reduce supply chain emissions, improve refrigeration systems, expand renewable energy use, and address deforestation, sustainable seafood, and waste.

The company’s social impact is particularly notable in its treatment of employees and support for communities. In addition to its industry-leading employee compensation, Costco offers employee scholarships, partners with local elementary schools, and makes substantial food donations. In 2025, Costco donated 140.8 million pounds of food and other products from U.S. warehouses and depots to Feeding America, while also supporting food banks internationally. The company contributes 1% of pretax profits to selected charitable causes and runs an annual Workplace Giving Campaign that matches employee donations at 70%.

Costco has also distinguished itself from some large retailers by maintaining its commitment to diversity, equity, and inclusion against political headwinds. At the same time, the company faces several issues relevant to Clean Yield’s screens, including revenue from gasoline and tobacco sales, supply-chain labor concerns, data privacy issues, and historical opioid-related litigation. As part of Clean Yield’s ongoing review of its holdings, several social and governance concerns remain areas of monitoring.

Overall, Costco’s employee practices, community engagement, and environmental initiatives offer several meaningful opportunities for positive impact through investment.

Learn more about Costco.