While most brick-and-mortar retailers like Walmart seem to have given up on physical expansion, choosing instead to grow online and through the omnichannel, Costco (COST 0.63%) is moving full-speed ahead with new stores.
That's a testament to the brand's popularity and its core business model of bargain prices for bulk goods, which has proven to be a traffic driver and a growth engine.
Now, Costco is making an exceptionally large purchase in Fort Myers, acquiring a 55-acre development for approximately $55 million, making it one of the largest and highest-value land sales in Southwest Florida history.
The location has a traffic count of over 100,000 vehicles per day, making it attractive to the retailer, though it initially sought a smaller footprint of just 25 to 30 acres. Costco will sell off some of the land that it doesn't need.
Image source: Getty Images.
Costco is still chasing demand
Beyond the Fort Myers purchase, Costco's numbers show the company continuing to deliver steady growth even in an uncertain economic environment.
Through the first 35 weeks of its current fiscal year, Costco has reported comparable sales adjusted for fuel prices and foreign currency of 6.5%, and overall sales are up 9.5% to $197.2 billion, which reflects higher gas prices, a weaker dollar, and the impact of new stores.
Costco finished fiscal 2025 with 914 warehouses in the world, up from 890 the previous year, a growth rate of about 3%. For a company the size of Costco, that's a relatively low store count, indicating that it has significant room for growth in the U.S. and beyond. Though its average store footprint, at 147,000 square feet, is similar to a Walmart, Costco's stores generate significantly higher sales per square foot.
Looking ahead, the company plans to open approximately 30 stores a year over the next five to 10 years, and it wouldn't be surprising to see its expansion continue beyond that. The company has proven itself as an all-weather business as its membership model and low prices keep customers coming back even in difficult economic periods, and perks like cheap gas are popular during times like now, when gas prices have spiked.
While Costco does have an e-commerce business, it is limited, and the company has no plans for buy-online/pick-up-in-store, the way many of its competitors do. Costco's top priority is getting customers into its stores, as they tend to spend more money on things like impulse purchases, whether that be food, clothing, or furniture.
NASDAQ: COST
Key Data Points
Is Costco a buy?
Costco may be more expensive than any other brick-and-mortar retail stock at a price-to-earnings ratio 53, but the company has earned that premium as it continues to deliver strong comparable sales growth, and has a clear path to expansion.
While Costco's execution and business model have made it a winner, its 3% store growth is still modest. At its current price tag, I'd rather wait for a better buying opportunity, despite the strength of the overall business.
