⚠ Eighty-Six Percent From Two CountriesModerate threat

Costco's fourteen-country list flatters its diversification. Its own risk factors open with the concentration and state it precisely: "Our financial and operational performance is highly dependent on our U.S. and Canadian operations, which comprised 86% and 84% of net sales and operating income in 2025. Within the U.S., we are highly dependent on our California operations, which comprised 26% of U.S. net sales in 2025."¹

Multiply through and California is roughly a fifth of the whole company's net sales — around $52 billion, from one American state. Costco adds that "our California market, in general, has a larger percentage of higher volume warehouses as compared to our other domestic markets," so the exposure is to the most productive part of the estate rather than an average slice.

Concentration on that scale in a single legal and economic jurisdiction is unusual for a company of Costco's size, and it compounds several other exposures on this page. California employment law is where the disclosed wage-and-hour class actions and Private Attorneys General Act representative actions sit². California fuel prices, housing costs and unemployment drive a fifth of Costco's revenue directly. And the format's core assumption — a household with a car, a driveway and storage — is most stressed in exactly the expensive coastal markets where Costco's best warehouses are.

The company lists what would go wrong: slow growth or declines in comparable sales, negative operating expense trends including labour, healthcare and energy costs, missed warehouse openings, cannibalisation, sales mix shifting toward lower-margin products, and economic conditions including higher unemployment and depressed home values.

The counterweight is that international is both growing faster and earning more per dollar — Other International at a 4.33% operating margin against the United States' 3.44%³ — so the concentration is falling. Slowly: Other International went from 13.5% to 13.9% of revenue over three years.

One line does it: the United States and Canada share of net sales, 86%. It has to come down for a long time before this stops being the largest single-jurisdiction bet in the collection, and Costco discloses it in one sentence every year.