Fitch Ratings has affirmed Costco’s long-term Issuer Default Rating at “AA” with a Stable Outlook, highlighting the retailer’s substantial size and durable membership model.

The rating applies to Costco’s IDR and its senior unsecured notes, and acknowledges that in fiscal 2025 (ending in August), the company generated USD 275 billion in revenue and USD 13.5 billion in EBITDA.

Fitch emphasizes Costco’s position as the third-largest retailer in the United States, operating 914 warehouse clubsand serving 145 million membership cardholders, with an average renewal rate close to 90%. Membership fee revenue reached USD 5.3 billion in fiscal 2025.

The agency expects Costco to deliver around 5% annual revenue growth through new warehouse openings and product upgrades, implying continued market-share gains. Fitch also forecasts that EBITDAR leverage will remain around recent levels and below 1x, even after factoring in the occasional debt-funded special dividends.

Costco’s strong cash-flow generation is a key pillar of its rating. Over the next two to three years, the company is expected to generate more than USD 3 billion in free cash flow annually after paying roughly USD 2.5 billion in regular dividends. The company currently holds more than USD 15 billion in cash and short-term investments.

The retailer’s EBITDAR leverage has averaged around 1x over the past five years and declined to 0.7x in fiscal 2025 as EBITDA increased and some debt was paid down. Fitch’s rating case assumes that leverage will remain below 1.5x.

Fitch also compares Costco with other major retailers, noting that although Walmart is significantly larger in scale, it carries the same “AA” rating. By contrast, Amazon.com, despite its leadership in e-commerce and cloud computing, is rated slightly lower at “AA-”.

Market Take:

Looking ahead, Fitch expects Costco to achieve 4%–6% annual revenue growth, driven by 3%–5% comparable-store sales growth and the addition of 25–30 new warehouses per year. Under this scenario, the company’s revenue could exceed USD 300 billion by fiscal 2027.