Two Thousand Dollars a Square FootWide moat

Costco Wholesale (COST) — moat facet

Density is not vanity — at half this sales per foot the merchandise business would lose money before the membership fee arrived.

Retail productivity is measured in sales per square foot, and by that measure Costco is not in the same industry as most of its competitors.

Net sales per square foot of selling floor$2,004Costco$1,148Sam's ClubFY2025 $269,912M over 134.7m sq ft; Sam's FY2026 $93,015M over 81m sq ft.
Density is what turns an 11% gross margin into an adequate return, because almost every warehouse cost is fixed against the building rather than variable with the sale.

Fiscal 2025 net sales of $269,912 million came from about 134.7 million square feet of operating floor space1 — roughly $2,004 per square foot2. Sam's Club's American segment did $93,015 million from 81 million square feet3, about $1,148. Costco is running about 1.75 times the sales density of the only other national warehouse club, from boxes that are on average slightly larger.

Density is not vanity. It is the mechanism by which a low gross margin becomes an adequate return. Rent, depreciation, utilities, management and most of the labour in a warehouse are fixed against the building, not against the sales that pass through it, so the profit on the last dollar of volume is very much larger than the profit on the first. Costco's selling, general and administrative expenses were 9.25% of net sales in fiscal 20254; at half the sales density that ratio would be nearer eighteen percent and the company would be losing money on merchandise before the membership fee arrived.

Two things produce the density. One is the assortment discipline — 4,000 items across 147,000 square feet means every item gets an enormous footprint and an enormous volume. The other is the membership itself, which pre-selects for people who intend to buy a lot, and which the gas station, the pharmacy and the food court exist to bring back more often.

Density also explains why Costco opens so few warehouses relative to its size. Twenty-seven openings in fiscal 2025 against 914 in operation is about 3% unit growth, and the constraint is not capital — the company holds $19,996 million in cash — but the number of catchments large enough to support $295 million of annual sales.

Moat trajectory: Holding steady

Sales per square foot rises with comparable sales and falls with each new box in a served market. The two have roughly offset for years.

The number that tests this moat
Moat Explorer calc
Net sales per square foot of selling floor
About $2,004, against about $1,148 at Sam's Club

Density is what turns an 11% gross margin into an adequate return, because almost every warehouse cost is fixed against the building. At half this figure the merchandise business would lose money before the fee arrived.

How it's calculated: $269,912M of fiscal 2025 net sales divided by 134.7 million square feet of operating floor space, both from the 10-K. The Sam's Club comparison is $93,015M over 81 million square feet from Walmart's fiscal 2026 Form 10-K.
Source: Costco Form 10-K, fiscal year ended August 31, 2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
Each New Warehouse Cannibalises the Old Ones
Costco says it in its own risk factors: the way to grow converts one very productive box into two moderately productive ones.
References
  1. ReportedFiscal 2025 net sales of $269,912 million came from about 134.7 million square feet of operating floor space — roughly $2,004 per square foot.
    Costco Form 10-K, fiscal year ended August 31, 2025 - Item 2 Properties (725 warehouses with owned land and building, 141 land-only leases, 134.7 million square feet of selling floor and 32.2 million of distribution) — FY2025 · publ. October 8, 2025 · source ↗
  2. Moat Explorer calcFiscal 2025 net sales of $269,912 million came from about 134.7 million square feet of operating floor space — roughly $2,004 per square foot.
    Moat Explorer calculation: Costco FY2025 net sales of $269,912M over 134.7 million square feet and 914 warehouses; Sam's Club U.S. FY2026 net sales of $93,015M over 81 million square feet and 601 clubs — FY2025 vs Sam's Club FY2026 · publ. September 2026 · source ↗
  3. ReportedSam's Club's American segment did $93,015 million from 81 million square feet, about $1,148.
    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 ↗
  4. ReportedCostco's selling, general and administrative expenses were 9.25% of net sales in fiscal 2025; at half the sales density that ratio would be nearer eighteen percent and the company would be losing money on merchandise before the membership...
    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 ↗
Sources
Generated September 23, 2026