What Charlie Munger's Costco Investment Reveals About These 3 Stock Performance Indicators

The legendary investor Charlie Munger, Warren Buffett’s longtime partner at Berkshire Hathaway, never sold a single share of Costco Wholesale. This unwavering commitment tells us something profound: certain retail businesses possess structural advantages that value investors can’t ignore. With fiscal 2025 net sales reaching $270 billion, Costco has become one of the world’s dominant retail forces—and the metrics behind its success deserve serious attention from anyone building a diversified investment portfolio.

Costco stock has delivered a 540% return over the past decade, a performance that would satisfy even the most disciplined value investor. Yet the stock is currently trading 9% below its peak, which presents an interesting inflection point for investors evaluating its fundamental strength.

Same-Store Sales: The Purest Measure of Business Health

The first metric that serious investors must monitor is same-store sales (SSS), which isolates organic revenue growth from existing locations over a standardized period. This represents management’s true capacity to execute: selecting prime warehouse locations, driving customer traffic, maximizing basket size, and maintaining operational efficiency. It’s the metric Charlie Munger would scrutinize before considering any retail investment.

Costco’s track record here is exceptional. Over the last six fiscal years—spanning 2020 through 2025—the company sustained positive same-store sales growth despite facing a global pandemic, supply chain disruptions, record inflation, rising interest rates, and consumer spending constraints. This resilience isn’t luck; it reflects deep structural moats around the business. The company’s ability to maintain pricing power and customer enthusiasm through economic stress is precisely what value investors seek when evaluating long-term holdings.

Membership Renewal Economics: The Overlooked Profit Engine

Unlike traditional retailers where anyone can walk through the doors, Costco operates a membership model. The company currently serves 81.4 million members globally, and this recurring fee structure generates high-margin revenue that most analysts underestimate. In Q1 fiscal 2026 (ended November 23, 2025), membership fees alone contributed $1.3 billion in revenue—a stream that carries superior profitability compared to merchandise sales.

The real insight lies in membership renewal rates, which reached 92.2% in the U.S. and Canada and 89.7% worldwide in the most recent quarter. While these figures ticked down slightly from the prior quarter—primarily due to digitally-onboarded members showing lower retention—CFO Gary Millerchip indicated that management is focused on improving engagement with this cohort. For investors, these renewal metrics serve as a proxy for customer satisfaction and pricing power. High renewal rates signal that members perceive sufficient value to justify annual membership fees year after year.

Warehouse Expansion: Capitalizing on Market Opportunity

The scale is already enormous: 921 Costco warehouses operate across the globe. Despite this massive footprint, the leadership team continues identifying white space for expansion. Fiscal 2026 will see 28 net new warehouse openings, with management ultimately targeting 30 or more annually—roughly half in the United States.

This expansion strategy reveals sophisticated capital allocation. Warehouses opened in fiscal 2025 generated an average of $192 million in annualized net sales per location, up 28% compared to fiscal 2023 openings. This improvement signals that management has refined its store-selection process, likely deploying better real estate analytics and market penetration models. For investors, this means Costco is deploying capital into increasingly productive assets—a hallmark of management quality.

The Investment Case Through a Value Investor’s Lens

These three metrics converge on a single narrative: Costco possesses the type of durable competitive advantage that attracts long-term investors like Charlie Munger. The combination of consistent same-store sales growth, high membership renewal economics, and disciplined expansion capital creates a business model that compounds value across economic cycles.

The question isn’t whether Costco is a quality company—that’s evident from both the financial metrics and the confidence shown by world-class investors. Rather, the consideration centers on valuation and whether current price levels reflect appropriate compensation for the risks involved. For those seeking exposure to a proven retail compounder with structural competitive moats, understanding these three metrics provides the analytical foundation necessary for an informed decision.