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logoMorningstarJune 14, 2021

Costco Wholesale Corporation: Despite Digital Disruption of Brick-and-Mortar Retail, Costco Remains Well Positioned for Growth

Symbols
COST
Sector(s)
Consumer Defensive
Rating
Current Price
$422.22
Fair Value
Economic Moat
Stewardship
Summary

The leading warehouse club, Costco has 795 stores worldwide (at the end of fiscal 2020), with most sales derived in the United States (73%) and Canada (13%). It sells memberships that allow customers to shop in its warehouses, which feature low prices on a limited product assortment. Costco mainly caters to individual shoppers, but roughly 20% of paid members carry business memberships. Food and sundries accounted for 42% of fiscal 2020 sales, with hardlines 17%, ancillary businesses (such as fuel and pharmacy) nearly 17%, fresh food 14%, and softlines 10%. Costco’s warehouses average around 146,000 square feet; over 75% of its locations offer fuel. About 6% of Costco’s global sales come from e-commerce (excluding same-day grocery and various other services).

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Analyst Profile

Zain Akbari

Equity Analyst
Zain Akbari, CFA, is an equity analyst for Morningstar Research Services LLC, a wholly owned subsidiary of Morningstar, Inc. He covers food companies, auto parts retailers, and information services firms.Before joining Morningstar in 2015, Akbari spent several years at UBS, most recently leading the firm’s Liability Management, Americas team. During his time at UBS, Akbari structured and executed bond buybacks, exchange offers, and covenant modifications for investment-grade, high-yield, and convertible securities issued by American and Asian companies.Akbari holds a bachelor’s degree in finance and real estate from The Wharton School of The University of Pennsylvania and master’s degree in business administration from the University of Chicago Booth School of Business.