Costco Profit Margin By Region: U.S., Canada, and International

U.S. flag with dollar bills. Pexels Images.

This article explores Costco’s profitability and profit margins across different regions and worldwide. Costco primarily derives its profits from three key areas: the United States, Canada, and its other international operations.

The United States serves as Costco’s largest contributor to profitability, with Canada ranking second. The remainder of its profits is attributed to international markets outside of these two countries.

Keep in mind that the reported profitability and profit margins represent consolidated results, encompassing both the merchandise sales and membership fee segments. Together, these two streams drive Costco’s overall financial performance.

Let’s look at the details!

Investors interested in Costco’s other key statistics may find more resources on these pages:

Same Store Sales

• Costco same stores sales by segment: U.S., Canada, and International,

Revenue

• Costco revenue by category: foods, non-foods, fresh foods, etc.,
• Costco revenue by category: merchandise sales and membership fees,
• Costco E-Commerce (Online) sales revenue,
• Costco revenue by region: U.S., Canada, and International,

Financial Standing

• Costco financial position: debt due vs liquidity,

Comparison with Walmart

• Costco vs Walmart: profit margin,
• Costco vs Walmart: profit in the U.S. and International segments,
• Costco vs Walmart: total stores and average store size,

Other Statistics

• Costco gas station numbers and gasoline revenue,
• Costco total stores worldwide and in the U.S., Canada, Mexico, etc.,
• Costco headcount analysis: total employees and employee by region,

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Definitions

To help readers understand the content better, the following terms and glossaries have been provided.

Reportable Segments: Costco primarily operates membership warehouses through its wholly owned subsidiaries located in the U.S., Canada, Mexico, Japan, the U.K., Korea, Australia, Taiwan, China, Spain, France, Iceland, New Zealand, and Sweden.

The management organizes reportable segments based on operational decisions and financial performance assessments, which take into account geographic locations.

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Why does Costco generate significantly low profit margins?

Costco’s low profit margins are a result of its unique business strategy, which prioritizes customer savings over maximizing profits. Here are the key reasons:

• Low Markup Policy: Costco enforces strict pricing guidelines, especially for its private-label Kirkland Signature products, which are capped at a 15% markup. This ensures affordability for customers but limits profit margins.
• Bulk Purchasing: By buying products in large quantities, Costco secures better deals from suppliers. However, this bulk-buying model also means lower per-unit profits.


• Limited Product Variety: Unlike traditional retailers that stock tens of thousands of items, Costco offers a curated selection of around 4,000 products. This streamlines operations and reduces costs but also limits revenue opportunities.
• Membership Model: Costco relies heavily on its membership fees for profitability. While this model supports its low-price strategy, it means the company operates with thinner margins on actual product sales.
• Minimal Marketing and Store Design Costs: Costco keeps expenses low by avoiding elaborate marketing campaigns and maintaining a no-frills store layout. While this helps pass savings to customers, it also contributes to lower profit margins.

This approach has made Costco a favorite among value-conscious shoppers, even if it means sacrificing higher profit margins.

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Insight & Summary of Costco’s Profit Margin By Segment

The following analysis consolidates the trends observed across Costco’s profit margin by segment for the 2016–2025 period.

• Costco’s regional operating profit breakdown reveals a highly strategic, margin-accretive international footprint that consistently punches above its weight.

• While the United States remains the sheer volume driver — generating an average of $186,940 million (72.7% of consolidated revenue) over the last three periods — it operates at a highly compressed 3.3% average operating margin.

• Consequently, the U.S. contributes a disproportionately lower 66.6% of total operating profit. Costco intentionally leverages its domestic scale to suppress pricing and drive membership, accepting thinner margins at home.

• In contrast, the Canadian and International segments serve as critical profitability engines. Canada leads the portfolio with an exceptional 4.7% average operating margin, generating 17.8% of the company’s operating profit from just 13.6% of its revenue base.

• Similarly, the International segment yields a robust 4.1% margin and has accelerated its operating profit growth to a portfolio-leading 12.1% average over the latest three periods.

• This structural margin advantage outside the United States illustrates that as Costco matures its overseas warehouses, these regions become highly efficient profit centers, effectively lifting the consolidated operating margin to a sustainable 3.6%.

The table below combines Costco’s revenue and operating profit by segment into a single view for the latest three fiscal years.

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Revenue, Operating Profit, Margin, and YoY Growth

Costco’s reportable segments consist of the U.S., Canada, and Other International regions. The definitions of the company’s reportable segments are available here: reportable segments.

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U.S., Canada, International – Revenue and Mix

Costco’s reportable segments consist of the U.S., Canada, and Other International regions. The definitions of the company’s reportable segments are available here: reportable segments.

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U.S., Canada, International – Operating Profit and Mix

Costco’s reportable segments consist of the U.S., Canada, and Other International regions. The definitions of the company’s reportable segments are available here: reportable segments.

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U.S., Canada, International – Operating Margin

Costco’s reportable segments consist of the U.S., Canada, and Other International regions. The definitions of the company’s reportable segments are available here: reportable segments.

Costco operates with an exceptionally low-margin business model, as demonstrated by its consistently modest operating profit margins across all regions, including its largest market, the U.S.

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U.S., Canada, International, Worldwide – Operating Profit Growth

Costco’s reportable segments consist of the U.S., Canada, and Other International regions. The definitions of the company’s reportable segments are available here: reportable segments.

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References and Credits

1. All financial figures presented were obtained and referenced from Costco’s annual reports published on the company’s investor relations page: Costco Investor Relations.

2. Pexels Images.

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Disclosure

We may use artificial intelligence (AI) tools to assist us in writing some of the text in this article. However, the data is directly obtained from original sources and meticulously cross-checked by our editors multiple times to ensure its accuracy and reliability.

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