Costco vs Walmart: Operating Profit Margin Comparison

Wholesaler. Pexels Images.

This article compares the profit margin of Walmart and Costco. We will look at both companies’ operating profit margins.

In addition to the U.S. operations, we also compare the operating profit margins of both retailers’ international segments.

Let’s dive in!

For the detailed statistics of Walmart and Costco’s profitability and margins, you may find more resources on these pages:

Walmart

• Walmart profit margin by segment: U.S., International, and Sam’s Club,

Costco

• Costco profit margin by country: U.S., Canada, and International,

Walmart vs Costco

• Costco vs Walmart: profit comparison in the U.S. and International segments,
• Walmart vs Costco: number of stores and store size,

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Definitions

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

Walmart vs Costco in Fiscal Schedules: Walmart’s FY2026 financial results are compared against Costco’s FY2025 results due to differences in their fiscal year reporting.

Walmart operates on a fiscal calendar that ends on January 31, meaning its FY2026 includes February 2025 to January 2026. In contrast, Costco follows a fiscal year ending in August, making its FY2025 cover September 2024 to August 2025.

Since Costco’s FY2026 results are not yet available at the time of Walmart’s latest fiscal report, analysts and industry comparisons often use Costco’s FY2025 as the closest match when evaluating the two retailers’ financial performance.

This approach ensures that the most recent annual results for both companies are used while accounting for their differing fiscal schedules.

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Why does Walmart generate better profit margin than Costco?

Walmart consistently achieves higher profit margins than Costco due to several key factors:

• Business Model Differences: Walmart operates on a traditional retail model, selling products at everyday low prices without requiring memberships. Costco, on the other hand, relies on a membership-based warehouse model, which limits its customer base but allows for bulk sales at lower margins.

• Scale and Revenue: Walmart has a significantly larger footprint, with over 10,000 stores worldwide compared to Costco’s 876 warehouses. This scale enables Walmart to generate much higher revenue — $674 billion in fiscal year 2025 versus Costco’s $254 billion in fiscal year 2024.




• Product Assortment and Pricing Strategy: Walmart offers a vast range of products across multiple categories, including groceries, electronics, and apparel, allowing it to optimize pricing and margins. Costco focuses on a limited selection of bulk items, which keeps costs low but also restricts margin expansion.

• Operational Efficiency: Walmart leverages its massive supply chain and advanced logistics to negotiate better terms with suppliers, reducing costs and improving profitability. Costco, while efficient, prioritizes passing savings onto members rather than maximizing margins.

• Revenue Streams: Walmart generates revenue primarily from product sales, whereas Costco relies heavily on membership fees. While Costco’s membership model provides stability, it doesn’t contribute significantly to profit margins compared to Walmart’s diversified revenue streams.

While both retailers are highly successful, Walmart’s broader market reach, diversified revenue streams, and operational scale give it a significant advantage in generating better profit margins.

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Insight & Summary of Walmart vs Costco in Profit Margin

The following analysis consolidates the trends observed across the comparison between Walmart and Costco’s operating profit margin for the 2016–2025 period.

• Walmart U.S. has maintained a structural operating margin advantage over Costco U.S. throughout the period, operating in a range of 4.9% to 5.5% compared to Costco U.S.’s 2.7% to 3.4%. However, the gap has been narrowing — Walmart U.S.’s margin has remained relatively range-bound while Costco U.S. has delivered a steady upward trajectory, rising from 2.7% in 2016 to 3.4% by 2024 and 2025.

• The divergence in absolute margin levels is largely structural rather than indicative of superior operational performance: Walmart U.S. generates higher gross margins through a broader, more discretionary merchandise mix, while Costco U.S. deliberately compresses margins in exchange for membership-driven loyalty and volume. The directional trend — Costco U.S. expanding margins while Walmart U.S. holds steady — suggests that Costco’s model is generating incremental operating leverage as its revenue and membership base scales.

• The Sam’s Club versus Costco U.S. comparison is the most instructive pairing in the dataset, as both operate warehouse club formats with structurally similar business models. Through much of the period, the two traded margin leadership — Sam’s Club held a marginal edge in 2016, 2019, 2020, and 2021, while Costco U.S. led in 2017, 2022, 2023, 2024, and 2025.

• By the latter years of the period, Costco U.S. has established a clearer and more consistent margin advantage at 3.4% versus Sam’s Club’s 2.6% in 2025, reflecting the compounding benefits of Costco’s stronger membership economics, higher average transaction values, and greater purchasing scale. Sam’s Club’s margin volatility — including a notable trough of 1.5% in 2017 and a dip to 2.3% in 2023 — contrasts with Costco U.S.’s more stable and gradually improving profile, underscoring a more consistent execution track record.

• The international comparison presents the most striking reversal. Walmart International entered the period with a meaningful margin advantage over Costco International at 4.9% versus 4.2% in 2016, but has since ceded that lead entirely. By 2025, Costco International’s margin has expanded to 4.7% while Walmart International’s has compressed to 3.9% — a near-complete inversion of the 2016 dynamic. Walmart International’s margin deterioration reflects the turbulence of its portfolio rationalization over the decade, including divestitures, write-downs, and the uneven profitability of retained markets.

• Costco International, by contrast, has demonstrated a quiet but consistent margin expansion, driven by the maturation of its Canadian operations — its largest international market — and the growing contribution of newer Asia-Pacific locations reaching operational scale. The crossover in international margin leadership, now firmly in Costco’s favor, is a notable competitive signal that the warehouse club model travels more effectively across geographies than conventional big-box retail.

The table below combines the profit margin comparison between Walmart and Costco into a single view for the latest three fiscal years.

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Walmart U.S. vs Costco U.S.

For the definition of the fiscal schedules of Walmart and Costco, you may refer to this section: Walmart vs Costco in fiscal schedules.

Walmart U.S. generates much better profit margins than Costco U.S., as shown in the chart above.

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Sam’s Club vs Costco U.S.

For the definition of the fiscal schedules of Walmart and Costco, you may refer to this section: Walmart vs Costco in fiscal schedules.

Sam’s Club’s operating profit margin is comparable with that of Costco U.S., as illustrated in the chart above. However, in recent years, Sam’s Club’s operating profit margin has significantly declined, making it considerably lower than that of Costco U.S.

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Walmart International vs Costco International

For the definition of the fiscal schedules of Walmart and Costco, you may refer to this section: Walmart vs Costco in fiscal schedules.

Outside of the U.S., Walmart International generates about the same profit margin as Costco International (inclusive of Canada).

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References and Credits

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

2. Pexels Images.

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Disclosure

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