Costco: The Rival That Charges AdmissionWide moat

Walmart (WMT) — moat facet

Costco earns a better living out of the same square feet, and Walmart cannot copy it without ceasing to be Walmart.

Costco is the one competitor that earns a better living than Walmart out of the same square feet, and Walmart cannot copy it without ceasing to be Walmart.

Net sales per building, latest fiscal year ($m)~$295mCostco warehouse~$155mSam's Club$104.7mWalmart U.S. storeCostco runs an 11.12% gross margin; its $5.3bn of membership fees is most of the profit.
Costco earns a better living out of the same square feet. Walmart cannot copy it without abandoning the assortment, the catchment and the customer at once.

The gap is density. Costco does about $295 million of net sales per warehouse; Sam's Club does about $155 million per club1. Walmart U.S. does about $104.7 million per store2. Costco runs an 11.12% gross margin covering 9.25% of costs, and the difference between those two — about $5.1 billion — is its entire merchandise profit; the $5.3 billion of membership fees is the rest3. It is a subscription business that runs warehouses to justify the subscription.

Walmart has been running the same format since 1983 and the merchandise still does not pay for itself. That comparison has a page of its own on Costco's side of this app, and the short version is that the variable is volume per building rather than margin rate.

Why Walmart cannot simply adopt the model is the interesting part. Costco's economics require a customer who will prepay an annual fee, drive further, buy in bulk and accept about four thousand items. Walmart's customer is frequently the one who cannot prepay anything, needs a specific item today, and lives ten minutes away. Converting the supercenter estate to a club format would mean abandoning the assortment, the catchment and the customer simultaneously — so Walmart runs the experiment in a separate box, at arm's length, where it earns 2.6% of net sales4.

The rivalry is therefore a division of territory rather than a fight, and it holds while the territory is physical. Where it is genuinely contested is delivery, membership and advertising — three businesses Costco is building late and Walmart is building fast.

Watch membership fee revenue growth at both. Walmart's rose 17% globally in the June 2026 quarter and Sam's Club's 6%5. Sam's Club closing the density gap would be the first evidence in forty-three years that the model is transferable.

Moat trajectory: Holding steady

The division of territory has held for forty-three years and shows no sign of moving. Sam's Club has not closed the density gap, Costco has not attempted Walmart's assortment, and both are now building membership, delivery and advertising businesses at the same time.

The number that tests this moat
Moat Explorer calc
Net sales per store against per warehouse
$104.7 million against about $295 million

Costco does nearly three times Walmart's volume through each building, on a membership model Walmart cannot copy without abandoning its assortment, its catchment and its customer. Sam's Club, running the same format since 1983, does about $155 million.

Source: Moat Explorer calculation from both companies' filings ↗
References
  1. Moat Explorer calcCostco does about $295 million of net sales per warehouse; Sam's Club does about $155 million per club.
    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 ↗
  2. Moat Explorer calcWalmart U.S. does about $104.7 million per store.
    Moat Explorer calculation from figures in Walmart's own filings: global eCommerce of about $150.4 billion (Walmart U.S. $99.6B + International $35.8B + Sam's Club $15.0B) against $120.9 billion, a $29.5 billion increase against a $31,875M rise in net sales ($706,413M against $674,538M), about 92%; Walmart U.S. selling floor of 698.7 million square feet (633,724 + 36,609 + 28,375 thousand) and net sales per store of $104.7 million ($482,975M over 4,611 stores); operating margin 4.18% ($29,825M/$713,163M) against 4.31% ($27,012M/$648,125M); net margin 3.07%; gross profit rate 24.2% ($171,018M/$706,413M); grocery 59.1% of Walmart U.S. net sales ($285,482M/$482,975M) against 59.8% ($264,210M/$441,817M) and grocery growth of 3.4%; general merchandise to grocery ratio 0.40 against 0.43; health and wellness +26.7% ($54,898M to $69,547M); payables less inventories $4,210M ($63,061M less $58,851M); rent 0.34% of revenue ($2,434M/$713,163M); capital expenditure 64% of operating cash flow ($26,642M/$41,565M); a 1% overrun on $147,943M of expense is $1,479M; eCommerce penetration 27.5% international ($35.8B/$130,423M) and 20.6% at Walmart U.S. ($99.6B/$482,975M); shareholder returns $15,587M ($7,507M dividends plus $8,080M repurchases) against $14,923M of free cash flow; Q2 FY2027 net income attributable down 9.4% ($6,366M against $7,026M); Walmart U.S. comparable sales of about 3.9% excluding the 125 basis point pharmacy headwind — FY2024-Q2 FY2027 · publ. September 2026 · source ↗
  3. ReportedCostco runs an 11.12% gross margin covering 9.25% of costs, and the difference between those two — about $5.1 billion — is its entire merchandise profit; the $5.3 billion of membership fees is the rest.
    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 ↗
  4. ReportedConverting the supercenter estate to a club format would mean abandoning the assortment, the catchment and the customer simultaneously — so Walmart runs the 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 - consolidated financial statements and notes (total revenues $713,163M, net sales $706,413M, membership and other income $6,750M, cost of sales $535,395M, operating expenses $147,943M, operating income $29,825M, net income attributable to Walmart $21,893M, diluted EPS $2.73; balance sheet including inventories $58,851M, accounts payable $63,061M, property and equipment net $136,083M, accumulated depreciation $134,587M, depreciation and amortisation $14,203M; segment note; disaggregation of revenue by merchandise category and by market, and eCommerce net sales by segment) — FY2026 (ended January 31, 2026) · publ. March 13, 2026 · source ↗
  5. ReportedWalmart's rose 17% globally in the June 2026 quarter and Sam's Club's 6%.
    Walmart second-quarter fiscal 2027 earnings release (Form 8-K exhibit 99.1) - revenue $187.9 billion +5.9% and +5.1% in constant currency; operating income +28.8% and +17.4% adjusted in constant currency; global eCommerce +23%; global advertising +38% with Walmart Connect excluding VIZIO +43%; membership fee revenue +17%; gross profit rate +96 basis points and Walmart U.S. +158; Walmart U.S. comp sales +2.6% and operating income +20.6% with operating expenses deleveraged 72 basis points; Sam's Club operating income +44.3% and International +16.6%; ROA 8.0% and ROI 15.4%; free cash flow $5.5 billion; 42.3 million shares repurchased for $5.1 billion year to date; FY27 guidance of 4.0-5.0% net sales growth, 7.0-8.5% adjusted operating income growth and $2.80-$2.87 adjusted EPS — Q2 FY2027 · publ. August 20, 2026 · source ↗
Sources
Generated September 22, 2026