Costco Revenue Segments: Foods, Non-Foods, Fresh Foods, etc.

Dried foods. Pexels Images.

This article covers Costco’s revenue breakdown by segment. Costco derives its revenue from several business divisions, including foods and sundries, non-foods, fresh foods, warehouse ancillary and other businesses.

You may find more information about Costco’s business segments here: foods and sundries, non-foods, fresh foods, warehouse ancillary, and other businesses.

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

• Costco revenue breakdown: membership and merchandise sales,
• Costco revenue by segment, and
• Costco profit margin vs Walmart.

Let’s look at the revenue breakdown!

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Definitions Of Segments

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

Foods and Sundries: Costco’s Foods and Sundries segment includes sales of sundries, dry grocery, candy, cooler, freezer, deli, liquor, and tobacco.

Non-Foods: Costco’s Non-Foods segment includes sales of major appliances, small electronics, health and beauty aids, hardware, lawn and garden, sporting goods, tires, toys and seasonal, office supplies, automotive, stamps, tickets, apparel, furniture, domestics, housewares, special order kiosk, and jewelry.

Fresh Foods: Costco’s Fresh Foods segment includes sales of meat, produce, service deli, and bakery.

Warehouse Ancillary: Costco’s Warehouse Ancillary segment includes sales of gasoline, pharmacy, optical, food court, hearing aids, and tire installation.

Other Businesses: Costco’s Other Businesses segment includes sales from e-commerce, business centers, travel, and other.

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Why is Costco getting the majority of its revenue from the Foods and Sundries segment?

Costco’s Foods and Sundries segment is a major revenue driver for several reasons:

• High Demand for Essentials: This segment includes everyday essentials like packaged foods, snacks, beverages, and household items, which are consistently in high demand. These products are staples in most households, ensuring steady sales.
• Competitive Pricing: Costco’s business model focuses on offering high-quality products at competitive prices. This attracts a large customer base looking for value, especially in the Foods and Sundries segment where price sensitivity is high.
• Bulk Sales: Costco’s strategy of selling products in bulk quantities appeals to customers who want to save money by buying in larger volumes. This is particularly effective for non-perishable items in the Foods and Sundries segment.
• Private Label Success: The Kirkland Signature brand, Costco’s private label, is known for its quality and value. Many products in the Foods and Sundries segment are sold under this brand, boosting sales and customer loyalty.
• Membership Model: Costco’s membership model encourages repeat purchases. Members are more likely to shop frequently to maximize the value of their membership, leading to higher sales in essential categories like Foods and Sundries.
• Wide Product Range: The Foods and Sundries segment covers a broad range of products, catering to diverse customer needs and preferences. This variety helps attract a wide customer base.

These factors combined make the Foods and Sundries segment a cornerstone of Costco’s revenue generation strategy.

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Revenue From Foods and Sundries And Non-Foods

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Costco’s revenue consists of sales from the Foods and Sundries and Non-Foods segments. The definitions of these revenue segments are available here: Foods and Sundries and Non-Foods.

Costco derives the majority of its revenue from the Foods and Sundries segment, which reached a total of $101.5 billion in fiscal year 2024. This represents a 6% increase from the $96.2 billion recorded in fiscal year 2023.

In fiscal year 2022, Costco earned $85.6 billion from the Foods and Sundries department, an 11% increase from the $77.3 billion reported in fiscal year 2021. The growth in this segment has been remarkable over the years.

Costco’s revenue from Foods and Sundries has more than doubled since fiscal year 2016, rising from $49.9 billion to $101.5 billion in the latest results. This dramatic increase marks one of the largest revenue surges among all of Costco’s divisions.

While the Non-Foods department doesn’t generate as much revenue as the Foods and Sundries section, it has also experienced significant growth over the years.

As shown in the accompanying graph, Costco earned $64 billion from the Non-Foods segment in fiscal year 2024. This represents a record high over the past decade and an impressive increase of nearly 100% from the $32.5 billion reported in fiscal year 2016.

However, the 2024 revenue from the Non-Foods sector was still only 63% of the revenue from the Foods and Sundries segment. This trend underscores the pivotal role that Foods and Sundries play in Costco’s overall business strategy and revenue generation.

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Percentage Of Revenue From Foods and Sundries And Non-Foods

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Costco’s revenue consists of sales from the Foods and Sundries and Non-Foods segments. The definitions of these revenue segments are available here: Foods and Sundries and Non-Foods.

The percentage of Costco’s revenue from the Foods and Sundries section has consistently contributed around 40% of the total (excluding membership revenue).

In fiscal year 2024, Costco’s revenue from the Foods and Sundries segment made up 41% of the revenue within the merchandise sales category (excluding membership fees). This percentage is in line with the result measured in fiscal year 2023 but marks a modest increase from the 38% recorded in fiscal year 2022.

Over the long term, Costco’s revenue share from the Foods and Sundries division has remained relatively stable, averaging about 41%.

In contrast, Costco’s Non-Foods revenue represented only 26% of the total merchandise sales revenue (excluding membership revenue) in fiscal year 2024. Compared to the Foods and Sundries segment, the revenue share of the Non-Foods department has experienced more variability.

Between fiscal year 2016 and 2024, there have been notable fluctuations in this sector. For instance, the percentage of Costco’s revenue from the Non-Foods section peaked at 29% in fiscal year 2021. Since then, it has seen consecutive decreases, reaching just 26% by the end of fiscal year 2024. Historically, the revenue share from the Non-Foods department was a significant 28%.

This comparison highlights the stability and importance of the Foods and Sundries segment in Costco’s overall revenue composition, while the Non-Foods department has shown more variability over time.

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Revenue From Fresh Foods, Warehouse Ancillary, and Other Businesses

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Costco’s revenue consists of sales from the Fresh Foods, Warehouse Ancillary, and Other Businesses segments. The definitions of these revenue segments are available here: Fresh Foods, Warehouse Ancillary, and Other Businesses.

Costco’s Fresh Foods department generated approximately $34.2 billion in revenue in fiscal year 2024, reflecting a 7% increase from the $32 billion reported in fiscal year 2023. This impressive year-over-year (YoY) growth underscores the strong performance within this segment.

In fiscal year 2022, Costco’s sales revenue from the Fresh Foods sector totaled $29.5 billion, marking an 8% rise from the $27.2 billion reported in fiscal year 2021. The consistent growth trend in this segment highlights the increasing demand for fresh food products among Costco’s customer base.

Over the long term, Costco has seen considerable revenue growth from the Fresh Foods section. Since fiscal year 2016, revenue has more than doubled, rising from $16.3 billion to $34.2 billion in fiscal year 2024. This remarkable increase of over 100% in less than a decade demonstrates the significant expansion and success of the Fresh Foods department.

For the Warehouse Ancillary and Other Businesses departments, Costco combines the revenue from both segments in its financial reports. In fiscal year 2024, Costco’s revenue from these divisions reached an impressive $50 billion. This figure is roughly in line with the $48.7 billion reported the previous year but represents a substantial increase of nearly three times from the $17.4 billion measured in fiscal year 2016.

The combined revenue from the Warehouse Ancillary and Other Businesses departments underscores Costco’s diversified revenue streams, contributing to the company’s overall financial stability and growth. This diversification strategy helps mitigate risks associated with reliance on a single revenue source.

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Percentage Of Revenue From Fresh Foods, Warehouse Ancillary, and Other Businesses

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Costco’s revenue consists of sales from the Fresh Foods, Warehouse Ancillary, and Other Businesses segments. The definitions of these revenue segments are available here: Fresh Foods, Warehouse Ancillary, and Other Businesses.

Costco’s Fresh Foods department contributes slightly more than 10% of the company’s revenue (excluding membership fees). In fiscal year 2024, the revenue share from the Fresh Foods section represented 14% of the total merchandise sales revenue, which is roughly in line with the ratio measured a year ago.

Over the long term, from fiscal year 2016 to 2024, Costco’s percentage of revenue from the Fresh Foods segment has remained quite consistent, averaging around 14%, without significant fluctuations. This stability reflects the steady demand for fresh food products and Costco’s ability to meet customer expectations in this segment.

In comparison, the percentage of revenue from the Warehouse Ancillary and Other Businesses sectors has shown more variability. The revenue share from these segments has ranged from 15% to 21%. In fiscal year 2024, the percentage of revenue from the Warehouse Ancillary and Other Businesses segments totaled an impressive 20%, one of the highest ratios ever recorded over the past decade within these departments.

Although the revenue share has remained relatively constant at 20% from fiscal year 2022 to 2024, it was significantly lower at 16% from fiscal year 2020 to 2021, nearly reaching a bottom compared to the 15% measured in fiscal year 2016. This variability highlights the differences in revenue stability between the Fresh Foods department and the Warehouse Ancillary and Other Businesses sectors.

The consistent revenue contribution from the Fresh Foods segment underscores its importance in Costco’s overall revenue composition. Meanwhile, the variability in the Warehouse Ancillary and Other Businesses segments reflects the diverse nature of these departments and their susceptibility to market fluctuations.

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YoY Growth Rates Of Revenue Segments

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Costco’s revenue consists of sales from several segments. The definitions of these revenue segments are available here: foods and sundries, non-foods, fresh foods, warehouse ancillary, and other businesses.

Over the period from fiscal year 2020 to 2024, Costco’s overall revenue growth has averaged an impressive 11% annually. Within each department, the Foods and Sundries section has reported an average annual revenue growth of 11%, marking it as one of the segments with the highest growth rate. This consistent performance underscores the enduring demand for everyday essentials and the effectiveness of Costco’s pricing strategy.

The Non-Foods segment has also shown strong performance, with an average annual revenue growth of 10% over the past five years. This growth reflects Costco’s ability to diversify its product offerings and attract a broad customer base.

The Fresh Foods division has outperformed other segments, with an average annual revenue growth of 12% from fiscal year 2020 to 2024. This robust growth highlights the increasing consumer preference for fresh, high-quality food products.

Among the various departments, the Warehouse Ancillary and Other Businesses segment has achieved the highest average annual revenue growth rate, notably at 13% over the same period. This growth is indicative of Costco’s successful expansion and enhancement of its ancillary services, which include pharmacy, optical, travel, and financial services.

This diversified growth across multiple segments demonstrates Costco’s resilience and adaptability in a dynamic retail environment. The company’s ability to consistently achieve strong revenue growth across its different departments underscores its strategic prowess and operational excellence.

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Conclusion

Overall, Costco’s Foods and Sundries section is the leading revenue contributor, averaging 41% of the total merchandise sales revenue. This segment’s consistent performance underscores its pivotal role in Costco’s business strategy.

The Non-Foods division makes up 27% on average, establishing it as the second-largest revenue contributor. This segment’s diverse product offerings and competitive pricing strategy attract a broad customer base, driving substantial sales.

Costco’s Fresh Foods department accounts for an average of 14% of the total merchandise sales revenue, making it the third-largest segment in terms of sales contribution. The consistent demand for high-quality, fresh products continues to support the growth of this segment.

The Warehouse Ancillary and Other Businesses segments collectively contribute an average revenue share of 18%, marking them as the fourth and fifth largest revenue generators, respectively. These segments encompass a range of services and products, including pharmacy, optical, travel, and financial services, enhancing Costco’s value proposition to its members.

Together, these segments highlight the diversified nature of Costco’s revenue streams, contributing to the company’s overall financial stability and growth. Costco’s ability to maintain a balanced revenue distribution across various departments underscores its strategic excellence and operational efficiency.

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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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