Walmart: Winning Everywhere Except HereWide moat

Costco Wholesale (COST) — moat facet

Costco is not beating Walmart; it is occupying a corner Walmart cannot enter without destroying its own model.

Any account of Costco that presents it as beating Walmart is wrong, and the numbers are not close. Walmart generated $713.2 billion of total revenue in fiscal 2026, of which net sales were $706.4 billion1. Costco's total revenue was $275.2 billion2. Walmart U.S. and Sam's Club U.S. together produced approximately 82% of Walmart's consolidated net sales, and Walmart International added $130.4 billion across 18 countries — more than three times Costco's entire non-North-American business.

Total revenue, latest fiscal year ($bn)$713.2bnWalmart$275.2bnCostcoWalmart U.S. and Sam's Club U.S. are about 82% of Walmart's consolidated net sales.
Costco is not beating Walmart and is not trying to. It occupies a corner Walmart cannot enter without abandoning the store base, the assortment, the customer and the profit model at once.

Walmart is also ahead where retail is moving. Its e-commerce operation is several times Costco's, its retail media network is one of the largest in the world, and it has spent years building automated fulfilment that Costco has not attempted. Costco's own risk factors concede that some competitors have "greater financial resources and technology capabilities, including the faster adoption of artificial intelligence, better access to merchandise, and greater market penetration"3.

What Walmart cannot do is become Costco. Walmart's format is built on a 24%-ish gross margin covering an operating cost base spread across thousands of smaller-catchment stores, most of them serving customers who visit for a specific item rather than a fortnightly stock-up. Converting that to an 11% margin covered by a membership fee would require abandoning the store base, the assortment, the customer and the profit model simultaneously. So Walmart runs the warehouse-club experiment in a separate box, at arm's length, where it earns 2.6% of net sales4.

That is the honest shape of the rivalry. These are not two companies fighting over one market; they are two models sharing a country, and each is close to unassailable inside its own logic. Costco is not taking Walmart's customers. It is taking a particular slice of a particular household's spending — the planned, bulk, price-sensitive slice — and Walmart's answer to that slice is Sam's Club.

The division of territory holds only while the territory is physical, and it is being tested where Costco is growing fastest. Digitally-enabled comparable sales rose 21% in the third quarter of fiscal 2026 against 7% for core merchandise5 — in the one channel where Costco's advantages are least transferable and Walmart's fulfilment density, marketplace and multi-billion-dollar advertising business apply in full. Costco's position is that its digital business is a member benefit rather than a marketplace, which is coherent and does not require winning; it does require that the channel deepen the membership rather than replace the trip.

Grade it on comparable sales excluding fuel: Costco's total company figure was 8% in fiscal 2025 and 7% across the first thirty-six weeks of fiscal 20266. If Costco stops outgrowing Walmart U.S. on that basis, the corner has stopped being defended.

Moat trajectory: Narrowing

Walmart's advantages compound fastest in e-commerce and retail media, which is exactly where Costco's growth is now coming from and where it is a late entrant.

The number that tests this moat
Reported
Walmart total revenue
$713.2 billion, against Costco's $275.2 billion

Costco is not beating Walmart on any measure except club economics. What matters is whether it keeps outgrowing Walmart U.S. on comparable sales excluding fuel; if it stops, the corner has stopped being defended.

Source: Walmart Form 10-K, fiscal year ended January 31, 2026 ↗
References
  1. ReportedWalmart generated $713.2 billion of total revenue in fiscal 2026, of which net sales were $706.4 billion.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - Sam's Club U.S. segment (net sales $93,015M from 601 clubs and 81 million square feet, gross profit $10,556M, operating expenses $10,639M, membership and other income $2,525M, operating income $2,442M) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  2. ReportedCostco's total revenue was $275.2 billion.
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 7 MD&A (net sales $269,912M, membership fees $5,323M, gross margin 11.12%, SG&A 9.25%, comparable-sales composition, capital expenditure, dividends and repurchases) — FY2025 · publ. October 8, 2025 · source ↗
  3. ReportedCostco's own risk factors concede that some competitors have "greater financial resources and technology capabilities, including the faster adoption of artificial intelligence, better access to merchandise, and greater market penetration".
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 1A Risk Factors (U.S. and Canada 86% of net sales and 84% of operating income, California 26% of U.S. net sales, cannibalisation, tariffs, supplier and site-acquisition risk, 'high market expectations') — FY2025 · publ. October 8, 2025 · source ↗
  4. ReportedSo Walmart runs the warehouse-club experiment in a separate box, at arm's length, where it earns 2.6% of net sales.
    Walmart Form 10-K, fiscal year ended January 31, 2026 - Sam's Club U.S. segment (net sales $93,015M from 601 clubs and 81 million square feet, gross profit $10,556M, operating expenses $10,639M, membership and other income $2,525M, operating income $2,442M) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  5. ReportedDigitally-enabled comparable sales rose 21% in the third quarter of fiscal 2026 against 7% for core merchandise — in the one channel where Costco's advantages are least transferable and Walmart's fulfilment density, marketplace and...
    Walmart Form 10-K, fiscal year ended January 31, 2026 - Sam's Club U.S. segment (net sales $93,015M from 601 clubs and 81 million square feet, gross profit $10,556M, operating expenses $10,639M, membership and other income $2,525M, operating income $2,442M) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  6. ReportedGrade it on comparable sales excluding fuel: Costco's total company figure was 8% in fiscal 2025 and 7% across the first thirty-six weeks of fiscal 2026.
    Costco Form 10-Q, quarter ended May 10, 2026 - MD&A (comparable sales +10% and +7% excluding fuel and currency, ticket +7% against frequency +2%, membership fees $1,373M, renewal 92.2% and 89.7%, gross margin 11.04%) — Q3 FY2026 and the first 36 weeks · publ. June 3, 2026 · source ↗
Sources
Generated September 23, 2026