--- title: "Costco Releases Latest Financial Report, China Market Challenges Remain" description: "On May 29, Eastern Time (May 30, Beijing Time), Costco (COST.US) released its Q3 FY2025 report. Revenue was $63.2 billion, up 8.0% YoY; membership fees were $1.24 billion, up from $1.12 billion; net income was $1.9 billion, up from $1.68 billion. Despite global success, Costco's performance in mainland China has been lackluster, with membership renewal rates at 62% versus 90% globally, and expansion lagging behind competitors like Sam's Club and Aldi." author: "零售荆言" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2025-06-06" categories: "Capital, Earnings & M&A, Retail Formats" language: "en" canonical: "https://xinjignxiao.com/en/articles/costco-releases-latest-financial-report-china-market-challenges-remain-5464b791/" markdown: "https://xinjignxiao.com/en/articles/costco-releases-latest-financial-report-china-market-challenges-remain-5464b791.md" original_source: "https://mp.weixin.qq.com/s/fV_z6Kq3rUxVxYA6aJ2PoQ" translation: "https://xinjignxiao.com/zh/articles/%E5%BC%80%E5%B8%82%E5%AE%A2costco%E5%8F%91%E6%9C%80%E6%96%B0%E8%B4%A2%E6%8A%A5-%E4%B8%AD%E5%9B%BD%E5%B8%82%E5%9C%BA%E5%9B%B0%E5%B1%80%E5%BE%85%E8%A7%A3-5464b791.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/costco-releases-latest-financial-report-china-market-challenges-remain-5464b791/" citation: "零售荆言. “Costco Releases Latest Financial Report, China Market Challenges Remain.” New Distribution, 2025-06-06. https://xinjignxiao.com/en/articles/costco-releases-latest-financial-report-china-market-challenges-remain-5464b791/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Costco Releases Latest Financial Report, China Market Challenges Remain > On May 29, Eastern Time (May 30, Beijing Time), Costco (COST.US) released its Q3 FY2025 report. Revenue was $63.2 billion, up 8.0% YoY; membership fees were $1.24 billion, up from $1.12 billion; net income was $1.9 billion, up from $1.68 billion. Despite global success, Costco's performance in mainland China has been lackluster, with membership renewal rates at 62% versus 90% globally, and expansion lagging behind competitors like Sam's Club and Aldi. **Source** | Retail Circle On May 29, Eastern Time (May 30, Beijing Time), Costco (COST.US) released its Q3 FY2025 report. The report shows Q3 revenue of $63.2 billion, up 8.0% YoY; membership fee income of $1.24 billion, compared to $1.12 billion in the same period last year; net income of $1.9 billion, compared to $1.68 billion last year. As a warehouse club giant with global sales exceeding Sam's Club, Costco is growing rapidly worldwide, but its performance in mainland China has been mediocre, making it a hot topic in the industry. **Membership Income and Sales per Square Foot Remain the Most Stable Ballast** As a global benchmark for warehouse membership stores, Costco's membership income is its most stable profit source. In FY2024, global paid members reached 76.2 million, and including household cardholders, total cardholders reached 137 million. The global renewal rate exceeds 90%. Costco's most formidable aspect is not retail revenue but membership card renewal income. In 2024, membership fees reached $4.8 billion, while retail net profit was estimated at $2.5 billion. In 2024, Costco's gross margin was 13%, with retail gross margin at 11% and membership fees accounting for 2%. With over 4,000 SKUs, monthly sales per square foot exceed RMB 10,000. Costco is called the efficiency pioneer of global retail. Its curated products appeal to domestic middle-class consumers in a way that other retailers cannot match. New stores opening with over 100,000 membership cards sold confirms domestic customers' recognition of Costco's value for money. However, it must be noted that in the domestic market, in terms of expansion speed, localized supply chain, and research on Chinese consumers, Costco has fallen behind its student Sam's Club and also behind Aldi, another retail giant that entered the Chinese market around the same time. The domestic membership renewal rate of 62% is far below the global average of 90%, indicating that Costco China's future is not entirely bright. **American Efficiency vs. Chinese Speed** When Costco entered China in 2019 with the aura of "the ceiling of American retail," the opening day at its Shanghai Minhang store sold 160,000 membership cards, a memorable spectacle. But five years later, with only 7 stores and no presence in the northern market, there is still a long way to go before realizing the bold claim of "disrupting Chinese retail." In contrast, Sam's Club achieved domestic revenue exceeding RMB 100 billion in 2024, firmly holding the top position. Leveraging its first-mover advantage, Sam's Club has penetrated third-tier cities, with average annual sales per store exceeding RMB 1.5 billion. From 2024 to May 2025, it opened 9 stores. The Wuhan store opened on May 28 is Sam's Club's 56th in China, and 7 more new stores are in key preparation stages. In March this year, Costco announced that it had confirmed locations for 9 new stores in FY2025, with 7 in the US, one each in Japan and Australia, but none in China. Costco, the world's largest warehouse club, has seen its store opening progress in mainland China remain stalled at Nanjing from a year ago. Meanwhile, German brand Aldi, also entering China in 2019, after several years of dormancy and understanding Chinese consumer pulse, began aggressive cross-regional expansion from 2024, reaching 68 stores. Behind this gap lies an ultimate contest between strategic determination and execution efficiency. Costco's advocated extreme efficiency has not shown advantages in developing the Chinese market, falling behind by more than one position. **American Distance vs. Chinese Thoughtfulness** Costco Asia President Richard Chang's ideal store model is: self-built 20,000 sqm flagship store plus 30,000 sqm parking lot, accommodating 1,500 parking spaces. Creating a new business district from scratch, Costco insists on a "suburban model" and all-self-built model. With large city urban areas already largely developed, this forces stores to be far from city centers. The Shanghai Minhang store is 30 km from the city center, and the Nanjing Jiangning store has only 4 communities within 3 km. This seemingly enhances the "members-only feel" but sacrifices convenience. With only 40% of households in China's first-tier cities owning cars, this location strategy makes it difficult for younger, fast-paced global consumers to access, and essentially excludes car-free households. Sam's Club adopts a mixed model of land acquisition, leasing, and renovating old stores. For example, Sam's Shanghai Jufengyuan Road store was converted from a Walmart hypermarket. As a fellow warehouse club, Sam's is closer to ordinary consumers. In January and April this year, Walmart reopened community supermarkets in Shenzhen, using community stores to build trust and on-demand delivery to win customer mindshare, aiming to be closer to customers. Aldi is even more adept at this, choosing community cores, covering 15,000 households within 500 meters, using small community stores to validate its model, adapting itself to Chinese consumer habits, achieving excellent performance of daily sales of RMB 1 million in 1,000 sqm stores. Distance is not an inherent trait; Sam's proximity maintains the format. This is the spark and thought generated by the collision of "stubborn long-tail" thinking and "flexible adaptation" logic in China. Costco's long-held "big packaging to show high cost-effectiveness" approach has also encountered real-world resistance in China. National Bureau of Statistics data shows that in 2023, the average household size in China dropped to 2.62 people. A Ms. Wang from Nanjing complained: "Costco meat is indeed cheap, but packages over 5 kg are hard to divide at home. With a small family, it takes a long time to finish, and fresh meat becomes stale. It's better to buy from nearby fresh food stores, even if a bit more expensive, buying fresh each time is more cost-effective." Sam's "small family adaptation" strategy has made members born after 1985 and 1990 account for 67% of its membership. Costco China's renewal rate is only 62%, not only lower than the global average of 90% but also lower than Sam's 82%. Customers are voting with their actions on the difference between Western norms and Chinese characteristics. Aldi, by using small packaging close to Chinese family needs, has won more recognition, allowing ordinary people to enjoy "affordable quality" nearby. Logistics experts say the reason Costco is hesitant to open stores deeper in mainland China is that its low product gross margins cannot support the relatively high logistics costs caused by few stores and insufficient order density. Another reason is that Costco's supply chain localization lags far behind Sam's, which sources 80% of products locally. 38% of consumers believe Costco products lack local affinity. Costco's classic SKUs account for over 60% of its assortment. For Chinese consumers who love novelty, once product fixation leads to visual fatigue, they turn to competitors. **American Stubbornness vs. Chinese Flexibility** When Sam's Club launched large-scale price cuts to attract customers in response to Hema's "Move Mountain Price," establishing a price image and targeting the entire FMCG retail industry, Costco still adhered to "global unified pricing." When Sam's implemented ultra-fast delivery and city-wide delivery with free shipping for orders over RMB 99 and RMB 299 respectively, Costco still charges an additional RMB 20 delivery fee. Costco's explanation is that it itemizes delivery costs rather than having consumers pay through product prices. This may be the biggest clash between American thinking and Chinese reality. For Chinese consumers accustomed to free shipping, free delivery has long been considered a basic industry standard, and paying extra for delivery is psychologically rejected. A Costco member said bluntly: "Ensuring low product prices and adding shipping fees is logically correct, but honestly, I even feel it's a loss to pay RMB 3 for shipping when my online grocery order doesn't meet the threshold. Costco charges shipping regardless of order amount, which doesn't fit Chinese consumer psychology." In the first- and second-tier cities where Costco has stores, young consumers' lives, work, and social interactions are fully online, and online shopping has become an indispensable part. Sam's Club's online orders have reached 48%, becoming a new engine for revenue growth, and on-demand delivery has become a key tool to attract consumers. Aldi, with 45% online orders, has become the new king of community retail. In contrast, Costco's online services appear low-key and slow, gradually falling behind in competition. Some experts predict that if Costco cannot achieve "doubling stores and free shipping" within three years, it may become a "niche player." For Costco, student Sam's Club has set an example in flexible site selection and supply chain localization while maintaining the format; competitor Aldi has also achieved success in product packaging adaptation and private brand development and optimization. The commonality between these two hottest foreign retailers in China is that they have both found a second growth curve by leveraging China's unique online shopping and on-demand delivery services. For Costco, which adheres to a 13% gross margin, it is at a critical juncture where it must make trade-offs in scale and cost, supply chain localization, and product refresh rates. Utilizing China's most developed logistics system and embracing instant retail may be an issue Costco should address immediately. According to Hu Yanan, co-founder of Source Flow Strategic Positioning Consulting, the more severe issue for Costco now is the change in consumer lifestyles, demographic shifts, and the influx of more players... The Chinese market will not give another lenient 20 years, nor will Sam's Club or Aldi. Costco has been actively exploring the Chinese market for six years. Its extreme cost-effectiveness and no-questions-asked return policy align with Chinese consumers' pursuit of value and quality. The Chinese retail market is inclusive, needing various business models to meet diverse customer needs. Costco's product and operational efficiency remain a model and benchmark for the retail industry. We look forward to Costco getting closer to customers and allowing more ordinary people to enjoy global quality products. --- ## Citation metadata - Publisher: New Distribution - Author: 零售荆言 - Published: 2025-06-06 - Canonical: https://xinjignxiao.com/en/articles/costco-releases-latest-financial-report-china-market-challenges-remain-5464b791/ - Original source: https://mp.weixin.qq.com/s/fV_z6Kq3rUxVxYA6aJ2PoQ ## Copyright and AI use This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL. Contact: zhaobo258@gmail.com · +86 158 5481 7671