Costco (NASDAQ: COST) has been a big winner so far this year. Consumer staples stocks have generally had a good year, with the Consumer Staples Select Sector SPDR Fund (ARCA:XLP) providing a total return of 15%. However, that still lags the over 20% return of the S&P 500.
Costco has particularly impressed. Its 33% total return this year surpasses its sector and the industry by a wide margin. So, what has been driving Costco's recent success, and is there still room for this stock to run?
Breaking Down Costco's Revenue Streams
Most everyone knows about Costco's business model. The company buys and sells items in massive bulk quantities, allowing it to give customers volume discounts. Particularly for large families, this makes Costco an attractive place to buy groceries.
On top of selling goods, the company also charges annual fees that allow its members to shop at the store. However, these fees make up a small amount of the company's revenue, at around 2% of the total. Food makes up the majority of the company's revenue at 53% in 2023, followed by non-food goods like appliances and electronics at 25%.
The last 20% comes from its "warehouse ancillary and other business" segment. This includes things like gasoline, pharmacy, and food court sales. It derives revenue primarily from the United States, which made up 73% ...
