Costco

Membership fee is the profit; merchandise margin is approximately zero.

Latest filing on file · 2026-08-30

Revenue: $303.2B; FY2026 · USD; 10-K · period ended 2026-08-30Source
Operating margin: 3.9%; FY2026; Operating income / revenue · filingSource
Operating cash flow: $15.8B; FY2026 · USD; 10-K · period ended 2026-08-30Source
Capital expenditures: $6.4B; FY2026 · USD; 10-K · period ended 2026-08-30Source

Overview

Business model and origins

Members pay an annual fee for the right to shop; merchandise margin stays near zero — the fee IS the business.

1 episode1 hook2026-05 case file as of

Origin

Sinegal apprenticed for ~25 years under Sol Price — first at FedMart, then at Price Club (founded 1976, San Diego). Price had already proved the warehouse-club model worked for small businesses. Sinegal co-founded Costco in Seattle in 1983 with attorney Jeffrey Brotman, taking Price's model and extending it to consumers. The two companies merged in 1993 (PriceCostco), split again in 1997, and Costco emerged as the dominant form. Charlie Munger sat on the Costco board for decades; Berkshire held a position for nearly as long. The whole arc is a story of one model, two generations, and an unusually long mentorship between Price and Sinegal.

Hooks from these episodes

Costco built a business where the membership fee is the profit and the merchandise margin is roughly zero. Charlie Munger called it his favourite company of all time and sat on the board.

Two opposite characteristics combining to create something neither could on its own.