Costco

“Inability to attract, train and retain qualified employees could adversely impact our business, financial condition and results of operations.”

Annual report 2025A · The company itself

“In March 2025, we increased the starting wage by $0.50 an hour to at least $20.00 for all entry-level positions in the U.S. and Canada. We also increased the top of wage scales by $1.00 per hour, bringing our average hourly rate at the end of 2025 for hourly employees in the U.S. to approximately $32.00 per hour.”

Annual report 2025A · The company itself

“Our suppliers (and those they depend upon for materials and services) are subject to risks, including labor disputes, union organizing activities, human and animal rights violations, financial liquidity, climate change, natural disasters, extreme weather conditions, environmental degradation, public health emergencies, supply constraints and general economic and political conditions and other risks similar to those we face that could limit their ability to timely provide us with acceptable merchandise.”

Annual report 2025A · The company itself

“United States 223,000 219,000 208,000 Canada 55,000 53,000 51,000 Other International 63,000 61,000 57,000 Total employees 341,000 333,000 316,000 Growth and Engagement We believe that our warehouses are among the most productive in the retail industry, owing largely to the commitment and efficiency of our employees.”

Annual report 2025A · The company itself

“Table of Contents General economic factors, domestically and internationally, may adversely affect our business, financial condition, and results of operations. Higher energy and gasoline costs, inflation, levels of unemployment, healthcare costs, consumer debt levels, foreign-currency exchange rates, unsettled financial markets, weaknesses in housing and real estate markets, reduced consumer confidence, changes and uncertainties related to government fiscal, monetary and tax policies including changes in interest rates, tax rates, duties, tariffs, or other restrictions, sovereign debt crises, pandemics and other health crises, and other economic factors could adversely affect demand for our products and services, require a change in product mix, or impact the cost of or ability to purchase inventory.”

Annual report 2025A · The company itself

“General We operate membership warehouses and e-commerce sites based on the concept that offering low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover. When combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities, these volumes and turnover enable us to operate profitably at significantly lower gross margins (net sales less merchandise costs) than most other retailers.”

Annual report 2025A · The company itself

“General We operate membership warehouses and e-commerce sites based on the concept that offering low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover. When combined with the operating efficiencies achieved by volume purchasing, efficient distribution and reduced handling of merchandise in no-frills, self-service warehouse facilities, these volumes and turnover enable us to operate profitably at significantly lower gross margins (net sales less merchandise costs) than most other retailers.”

Annual report 2025A · The company itself

“We have invested significantly in the development and protection of our well-recognized brands, including the Costco Wholesale trademarks and our private-label brand, Kirkland Signature. We believe that Kirkland Signature products are high quality, offered at prices that are generally lower than national brands, and help lower costs, differentiate our merchandise offerings, and generally earn higher margins. We expect to continue to increase the sales penetration of our private-label items.”

Annual report 2025A · The company itself

“We offer merchandise and services in the following categories: ■Core Merchandise Categories: •Foods and Sundries (including sundries, dry grocery, candy, cooler, freezer, liquor, and tobacco) •Non-Foods (including major appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosk, and jewelry) •Fresh Foods (including meat, produce, deli, and bakery) ■Warehouse Ancillary (includes gasoline, pharmacy, optical, food court, hearing aids, and tire installation) ■Other Businesses (includes e-commerce, business centers, travel, and other) Warehouse ancillary operate primarily within, next to or near our warehouses, encouraging more frequent shopping.”

Annual report 2025A · The company itself

“Our members are increasingly using mobile phones, tablets, computers, and other devices to shop and otherwise interact with us. We are making investments in our websites and mobile applications. If we are 12 Table of Contents unable to make, improve, or develop relevant member-facing technology in a timely manner, our ability to compete and our results of operations could be adversely affected.”

Annual report 2025A · The company itself

“Our e-commerce operations give members convenience and a broader selection of goods and services. Net sales for e-commerce represented approximately 7% of total net sales in 2025.”

Annual report 2025A · The company itself

“Prices of certain commodities, including gasoline and consumable goods used in manufacturing and our warehouse retail operations, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, inflationary pressures, labor costs, competition, market speculation, government regulations, taxes and periodic delays in delivery.”

Annual report 2025A · The company itself

“The number of warehouses with gas stations varies significantly by country. We operated 747 gas stations at the end of 2025. Our gasoline business represented approximately 10% of total net sales in 2025.”

Annual report 2025A · The company itself

“We sell a substantial amount of gasoline, the demand for which could be impacted by concerns and regulation about climate change.”

Annual report 2025A · The company itself

“The number of warehouses with gas stations varies significantly by country. We operated 747 gas stations at the end of 2025. Our gasoline business represented approximately 10% of total net sales in 2025.”

Annual report 2025A · The company itself

“We offer merchandise and services in the following categories: ■Core Merchandise Categories: •Foods and Sundries (including sundries, dry grocery, candy, cooler, freezer, liquor, and tobacco) •Non-Foods (including major appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosk, and jewelry) •Fresh Foods (including meat, produce, deli, and bakery) ■Warehouse Ancillary (includes gasoline, pharmacy, optical, food court, hearing aids, and tire installation) ■Other Businesses (includes e-commerce, business centers, travel, and other) Warehouse ancillary operate primarily within, next to or near our warehouses, encouraging more frequent shopping.”

Annual report 2025A · The company itself

“Table of Contents We have made and may continue to make investments and acquisitions to improve the speed, accuracy and efficiency of our supply chains and delivery channels. The effectiveness of these investments can be less predictable than opening new locations and might not provide the anticipated benefits or desired rates of return.”

Annual report 2025A · The company itself

“Table of Contents We have made and may continue to make investments and acquisitions to improve the speed, accuracy and efficiency of our supply chains and delivery channels. The effectiveness of these investments can be less predictable than opening new locations and might not provide the anticipated benefits or desired rates of return.”

Annual report 2025A · The company itself

“Costco Travel offers vacation packages, car rentals, cruises and other travel products exclusively for Costco members (offered to varying degrees in the U.S., Canada, Australia, and the U.K.).”

Annual report 2025A · The company itself

“Failure to identify timely or effectively respond to changing consumer tastes, preferences and spending patterns including those related to resource efficiency, environmental protection, human rights, and the transition to a low-carbon economy could negatively affect our relationship with our members, the demand for our products and services, and our market share.”

Annual report 2025A · The company itself

“If our merchandise, including food and prepared food products for human consumption, drugs, children's products, pet products and durable goods, do not meet or are perceived not to meet applicable safety or labeling standards or our members' expectations, we could experience lost sales, increased costs, litigation or reputational harm. The sale of these items involves the risk of illness or injury to our members.”

Annual report 2025A · The company itself

“Given the high volume of transactions we process, it is important that we build strong resiliency to lessen disruption from events such as power outages, computer and telecommunications failures, viruses, internal or external security breaches and other cybersecurity incidents, errors by employees, extreme weather, and catastrophic events. Any debilitating failure of our critical IT systems, data centers and backup systems would require significant investments in resources to restore services and may cause serious impairment in our business operations, including loss of business services, increased cost of moving merchandise and failure to provide service to our members.”

Annual report 2025A · The company itself

“This could adversely affect our competitiveness, results of operations and financial condition and, critically in light of our business model, loss of member confidence.”

Annual report 2025A · The company itself

“We are required to maintain the privacy and security of personal and business information amidst multiplying threat landscapes and in compliance with increasing privacy and data protection regulations globally. Failure to do so could damage our business, including our reputation with members, suppliers and employees, cause us to incur substantial additional costs, and become subject to litigation and regulatory action.”

Annual report 2025A · The company itself

“We must comply with evolving payment card association and network operating rules, including data security rules, certification requirements and rules governing electronic funds transfers. For example, we are subject to Payment Card Industry Data Security Standards, which contain compliance guidelines and standards with regard to our security surrounding the physical and electronic storage, processing and transmission of individual cardholder data. If our internal systems are breached or compromised, we may be liable for card re-issuance costs, subject to fines and higher transaction fees and lose our ability to accept card payments from our members, and our business and operating results could be adversely affected.”

Annual report 2025A · The company itself

“Prices of certain commodities, including gasoline and consumable goods used in manufacturing and our warehouse retail operations, are historically volatile and are subject to fluctuations arising from changes in domestic and international supply and demand, inflationary pressures, labor costs, competition, market speculation, government regulations, taxes and periodic delays in delivery. Rapid and significant changes in commodity prices and our ability and desire to pass them through to our members may affect our sales and profit margins.”

Annual report 2025A · The company itself

“In March 2025, we increased the starting wage by $0.50 an hour to at least $20.00 for all entry-level positions in the U.S. and Canada. We also increased the top of wage scales by $1.00 per hour, bringing our average hourly rate at the end of 2025 for hourly employees in the U.S. to approximately $32.00 per hour.”

Annual report 2025A · The company itself

“Table of Contents General economic factors, domestically and internationally, may adversely affect our business, financial condition, and results of operations. Higher energy and gasoline costs, inflation, levels of unemployment, healthcare costs, consumer debt levels, foreign-currency exchange rates, unsettled financial markets, weaknesses in housing and real estate markets, reduced consumer confidence, changes and uncertainties related to government fiscal, monetary and tax policies including changes in interest rates, tax rates, duties, tariffs, or other restrictions, sovereign debt crises, pandemics and other health crises, and other economic factors could adversely affect demand for our products and services, require a change in product mix, or impact the cost of or ability to purchase inventory.”

Annual report 2025A · The company itself

“Availability and performance of our IT systems are vital to our business. Failure to successfully execute IT projects and have IT systems available to our business would adversely impact our operations. Table of Contents IT systems play a crucial role in conducting our business. These systems are utilized to, among other things, process a very high volume of transactions, conduct payment transactions, track and value our inventory and produce reports critical for making business decisions.”

Annual report 2025A · The company itself

“Table of Contents General economic factors, domestically and internationally, may adversely affect our business, financial condition, and results of operations. Higher energy and gasoline costs, inflation, levels of unemployment, healthcare costs, consumer debt levels, foreign-currency exchange rates, unsettled financial markets, weaknesses in housing and real estate markets, reduced consumer confidence, changes and uncertainties related to government fiscal, monetary and tax policies including changes in interest rates, tax rates, duties, tariffs, or other restrictions, sovereign debt crises, pandemics and other health crises, and other economic factors could adversely affect demand for our products and services, require a change in product mix, or impact the cost of or ability to purchase inventory.”

Annual report 2025A · The company itself

“Availability and performance of our IT systems are vital to our business. Failure to successfully execute IT projects and have IT systems available to our business would adversely impact our operations. Table of Contents IT systems play a crucial role in conducting our business. These systems are utilized to, among other things, process a very high volume of transactions, conduct payment transactions, track and value our inventory and produce reports critical for making business decisions.”

Annual report 2025A · The company itself

“Additionally, trade-related actions in various countries have affected the costs of some of our merchandise. The degree of our exposure is dependent on (among other things) the type of goods, rates imposed, and timing of the tariffs and policy changes. The impact to our net sales and gross margin is influenced in part by our merchandising and pricing strategies in response to potential cost increases. Higher tariffs could adversely impact our results.”

Annual report 2025A · The company itself

“We depend on the orderly operation of the merchandise receiving and distribution process, primarily through our depots. We also rely upon processing, packaging, manufacturing and other facilities to support our business, which includes the production of certain private-label items. Although we believe that our operations are efficient, disruptions due to extreme weather, pandemics or other catastrophic events, labor issues, work stoppage, or other shipping problems may result in delays in the production and delivery of merchandise to and the operation of our warehouses, which could adversely affect sales and the satisfaction of our members.”

Annual report 2025A · The company itself

“Although we maintain specific coverages for catastrophic property losses, we still bear a significant portion of the risk of losses incurred as a result of any physical damage to, or the destruction of, any warehouses, depots, manufacturing or home office facilities, loss or spoilage of inventory, and business interruption. Such losses could materially impact our cash flows and results of operations.”

Annual report 2025A · The company itself

“Our suppliers (and those they depend upon for materials and services) are subject to risks, including labor disputes, union organizing activities, human and animal rights violations, financial liquidity, climate change, natural disasters, extreme weather conditions, environmental degradation, public health emergencies, supply constraints and general economic and political conditions and other risks similar to those we face that could limit their ability to timely provide us with acceptable merchandise.”

Annual report 2025A · The company itself

“Some competitors have greater financial resources and technology capabilities, including the faster adoption of artificial intelligence, better access to merchandise, and greater market penetration than we do.”

Annual report 2025A · The company itself

“We compete with other retailers and businesses for suitable locations. Local land use and other regulations restricting the construction and operation of our warehouses and depots, as well as local community actions opposed to the location of our warehouses or depots at specific sites and the adoption of local laws restricting our operations and environmental regulations, may impact our ability to find suitable locations and increase the cost of sites and of constructing, leasing and operating warehouses and depots.”

Annual report 2025A · The company itself

“We sell a substantial amount of gasoline, the demand for which could be impacted by concerns and regulation about climate change.”

Annual report 2025A · The company itself

“With continued growth in global demand for electricity and water stress in certain regions, we may have difficulty securing long-term utility contracts for new buildings or incur additional costs due to onsite generation and storage requirements.”

Annual report 2025A · The company itself

“More stringent fuel economy standards, changing public policies aimed at increasing the adoption of zero-emission and alternative fuel vehicles, and other regulations related to climate change may affect our future operations, adversely impact certain elements of our profitability, and require significant capital expenditures.”

Annual report 2025A · The company itself

“Failure to identify timely or effectively respond to changing consumer tastes, preferences and spending patterns including those related to resource efficiency, environmental protection, human rights, and the transition to a low-carbon economy could negatively affect our relationship with our members, the demand for our products and services, and our market share.”

Annual report 2025A · The company itself

“We are subject to a wide and growing array of federal, state, local and international laws and regulations relating to (among other things), product and food safety, marketing, information security and privacy, labor and employment, imports and customs, transportation, intellectual property, anti-corruption, and environmental or social matters. These laws and regulations may expand mandatory reporting, increase the scope and complexity of matters that we are required to regulate, assess, and disclose, potentially limit our sourcing flexibility or require extensive system or other changes that could increase the cost of doing business.”

Annual report 2025A · The company itself

“We are subject to a wide and growing array of federal, state, local and international laws and regulations relating to (among other things), product and food safety, marketing, information security and privacy, labor and employment, imports and customs, transportation, intellectual property, anti-corruption, and environmental or social matters. These laws and regulations may expand mandatory reporting, increase the scope and complexity of matters that we are required to regulate, assess, and disclose, potentially limit our sourcing flexibility or require extensive system or other changes that could increase the cost of doing business.”

Annual report 2025A · The company itself

“For example, multiple states are implementing extended producer responsibility laws that will require us to enact policies and processes and will increase expenses in the form of fees paid to the state governments, else be subject to fines and penalties, among other effects.”

Annual report 2025A · The company itself

“We depend on the orderly operation of the merchandise receiving and distribution process, primarily through our depots. We also rely upon processing, packaging, manufacturing and other facilities to support our business, which includes the production of certain private-label items. Although we believe that our operations are efficient, disruptions due to extreme weather, pandemics or other catastrophic events, labor issues, work stoppage, or other shipping problems may result in delays in the production and delivery of merchandise to and the operation of our warehouses, which could adversely affect sales and the satisfaction of our members.”

Annual report 2025A · The company itself

“We compete with other retailers and businesses for suitable locations. Local land use and other regulations restricting the construction and operation of our warehouses and depots, as well as local community actions opposed to the location of our warehouses or depots at specific sites and the adoption of local laws restricting our operations and environmental regulations, may impact our ability to find suitable locations and increase the cost of sites and of constructing, leasing and operating warehouses and depots.”

Annual report 2025A · The company itself

“Our e-commerce operations depend heavily on logistics providers, both internal and external, and are negatively affected when services are unable to be provided in a timely fashion.”

Annual report 2025A · The company itself

“We depend on the orderly operation of the merchandise receiving and distribution process, primarily through our depots. We also rely upon processing, packaging, manufacturing and other facilities to support our business, which includes the production of certain private-label items. Although we believe that our operations are efficient, disruptions due to extreme weather, pandemics or other catastrophic events, labor issues, work stoppage, or other shipping problems may result in delays in the production and delivery of merchandise to and the operation of our warehouses, which could adversely affect sales and the satisfaction of our members.”

Annual report 2025A · The company itself

“A portion of the products we purchase is paid for in a currency other than the local currency of the country in which the goods are sold. Currency fluctuations may increase our merchandise costs and may not be passed on to members and thus may adversely affect our results of operations.”

Annual report 2025A · The company itself

“With continued growth in global demand for electricity and water stress in certain regions, we may have difficulty securing long-term utility contracts for new buildings or incur additional costs due to onsite generation and storage requirements.”

Annual report 2025A · The company itself

“Our financial and operational performance is highly dependent on our U.S. and Canadian operations, which comprised 86% and 84% of net sales and operating income in 2025.”

Annual report 2025A · The company itself

“Within the U.S., we are highly dependent on our California operations, which comprised 26% of U.S. net sales in 2025.”

Annual report 2025A · The company itself

“During 2025, our international operations, including Canada, generated 27% and 34% of our net sales and operating income. Our international operations have accounted for an increasing portion of our warehouses, and we plan to continue international growth.”

Annual report 2025A · The company itself

“During 2025, our international operations, including Canada, generated 27% and 34% of our net sales and operating income. Our international operations have accounted for an increasing portion of our warehouses, and we plan to continue international growth.”

Annual report 2025A · The company itself

“Our financial and operational performance is highly dependent on our U.S. and Canadian operations, which comprised 86% and 84% of net sales and operating income in 2025.”

Annual report 2025A · The company itself