09/01/2026
Costco’s biggest long term risk has nothing to do with competition.
They’ve got one of the most efficient business models ever studied. And yet the company faces a growth ceiling that no amount of operational excellence can fix.
It's called the denominator effect.
In 2023, Costco grew its store count by 2.7%.
In 2024, 3.4%. But that number flatters the reality because new stores don't open January 1st. If we adjust for a half-year convention, the contribution from new units drops to roughly 3%. With overall revenue growth of 5%, that leaves same-store sales doing just 2% of the work in an inflation environment of similar magnitude.
In real terms, existing locations are barely growing at all.
As Costco approaches 900 locations, every new warehouse represents a smaller percentage of the total. The new unit development engine that drove decades of outperformance is running into the weight of its own success.
Sales remain the single value equation lever that matters most for Costco's future.
The question is whether the machine can keep delivering as it gets bigger?
What are your thoughts?
(Check out the latest video on The Value Equation for mine.)
