Costco Wholesale (COST) risk factors, FY2025 10-K

Business and Operating Risks

1. 01We are highly dependent on the financial performance of our U.S. and Canadian operations20% rewritten
2. 02We may be unsuccessful implementing our growth strategy, including expanding our business in existing markets and new markets, and integrating acquisitions, which could have an adverse impact on our business, financial condition and results of operations21% rewritten
3. 03We seek to expand in existing markets to attain a greater overall market share. A new warehouse may draw members away from our existing warehouses and adversely affect their comparable sales performance, member traffic, and profitability
4. 04Our failure to maintain membership growth, loyalty and brand recognition could adversely affect our results of operations
5. 05Disruptions in merchandise distribution or processing, packaging, manufacturing, and other facilities could adversely affect sales and member satisfaction
6. 06We may not timely identify or effectively respond to consumer tastes and preferences, which could negatively affect our relationship with our members, the demand for our products and services, and our market share
7. 07Availability and performance of our IT systems are vital to our business. Failure to successfully execute IT projects and have IT systems available to our business would adversely impact our operations
8. 08We are subject to payment-related risks
9. 09We might sell products that cause illness or injury to our members, harm to our reputation, and expose us to litigation
10. 10If we do not successfully develop and maintain a relevant and comprehensive digital experience for our members, our results of operations could be adversely impacted29% rewritten
11. 11Inability to attract, train and retain qualified employees could adversely impact our business, financial condition and results of operations
12. 12We may incur property, casualty or other losses not covered by our insurance

Market and Other External Risks

1. 13We face strong competition from other retailers and warehouse club operators, which could adversely affect our business, financial condition and results of operations
2. 14General economic factors, domestically and internationally, may adversely affect our business, financial condition, and results of operations
3. 15Suppliers may be unable to timely supply us with quality merchandise at competitive prices or may fail to adhere to our high standards, resulting in adverse effects on our business, merchandise inventories, sales, and profit margins
4. 16Fluctuations in foreign-exchange rates may adversely affect our results of operations
5. 17Natural disasters, extreme weather conditions, or other catastrophic events could negatively affect our business, financial condition, and results of operations
6. 18Pandemics and other health crises could affect our business, financial condition and results of operations in many respects
7. 19Failure to meet financial market expectations could adversely affect the market price and volatility of our stock44% rewritten

Legal and Regulatory Risks

1. 20Changes in or failure to comply with laws and regulations could adversely impact our business, financial condition and results of operationsNew
2. 21We are subject to risks associated with the legislative, judicial, accounting, regulatory, political and economic factors specific to the countries or regions in which we operate, which could adversely affect our business, financial condition and results of operations
3. 22Accounting principles and related pronouncements, implementation guidelines, and interpretations we apply to a wide range of matters that are relevant to our business, including self-insurance liabilities, are highly complex and involve subjective assumptions, estimates and judgments by our managementNew
4. 23We are exposed to risks relating to evaluations of controls required by Section 404 of the Sarbanes-Oxley Act and otherwise
5. 24Changes in federal, state and foreign tax rates and legislation, could adversely affect our financial condition and results of operationsNew
6. 25Failure or perceived failure to meet our environmental, social or governance (ESG) goals or expectations set by changing public interest and government regulation of ESG topics could result in reputational harm or adversely affect our businessNew
7. 26We are involved in a number of legal proceedings and audits and some of these outcomes could adversely affect our business, financial condition and results of operations