AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-2: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 19/10/2026
Moat63
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 3/4 · High renewals, paid membership growth and realized fee increases demonstrate a monetizable membership franchise, reinforced by Kirkland's growing sales contribution. Comparative cost superiority and network effects are unproven.
durability · 3/4 · Renewals remained high across three annual observations and stabilized in 2026 following the fee increase. The limited history and lower renewals than 2024 preclude exceptional durability.
customer dependency · 2/4 · Renewals and paid membership growth establish repeat demand directly. They do not establish essential customer dependence or material switching friction; customers face numerous competing retail formats.
erosion resilience · 2/4 · Stable latest annual renewals and growing membership revenue counter an erosion thesis, but renewals remain below 2024 and online-acquired cohorts renew less often. Comparison shopping is an observed competitive pressure; AI effects remain potential.
Pricing power69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 3/4 · Membership fee increases produced recognized revenue growth in 2025 and 2026 while renewals remained high. This is strong fee-pricing evidence, tempered by a higher Executive reward cap and actual merchandise price reductions; broad merchandise pricing power is unproven.
retention · 3/4 · Direct renewal disclosures show 92.3% in the U.S. and Canada and 89.8% worldwide in both 2025 and 2026. Paid membership also grew. Lower renewals than 2024 and weaker online cohorts limit the grade.
margin resilience · 3/4 · Annual gross margin remained broadly stable, rising 10 basis points excluding gasoline price inflation, and core margin on core sales increased 15 basis points. Quarterly core pressure and tariff refund benefits temper the result. These outcomes demonstrate resilience without independently proving a moat or pricing causation.
contractual freedom · 2/4 · Implemented membership fee and reward changes demonstrate discretion to alter commercial terms. Competition constrains merchandise pricing, and full refund, cancellation and repricing provisions are unavailable, leaving unrestricted freedom unestablished.
Predictability100
Five consecutive annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 100.00
- Revenue growth volatility (pp)
- 1.88
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 0.54
Financial strength81
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, or reported pretax profit plus reported interest expense when operating income is unavailable. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 100.00
- netDebtEbitGrade
- 100.00
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 24.79
- Debt / FCF (x)
- 0.66
- Net debt / operating income (x)
- -1.20
- Interest coverage (x)
- 80.59
- Current ratio (x)
- 1.06
Capital allocation99
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income or, if unavailable, EBIT calculated from reported pretax profit plus reported interest expense; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. Nonpositive invested capital has no defined return and remains unavailable. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 51.98
- 3-year average dilution (%)
- 0.01
- 3-year average SBC / revenue (%)
- 0.31
- cashConversionGrade
- 96.58
Management69
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 3/4 · Operating cash flow of $15.817 billion exceeded actual capital spending of $6.435 billion, alongside completed warehouse expansion and shareholder distributions. Share count stayed broadly stable despite stock compensation. These are demonstrated funding and deployment outcomes; project-level returns and repurchase value are unestablished, and 2027 spending is an intention.
incentive alignment · 2/4 · Actual earned performance RSUs, ownership requirements with dated compliance, and hedging restrictions support alignment. However, fiscal 2025 awards could qualify through either 3% sales growth or 2% pre-tax income growth, and long-service acceleration weakened deferred vesting for several executives. These are adopted arrangements, not proposed awards.
execution · 3/4 · Completed warehouse openings, 8% core merchandise sales growth, growing paid membership, higher operating cash flow and improved inventory turns and supplier terms demonstrate execution. Earlier opening expectations exceeded the eventual 28 openings, limiting claims of exact plan delivery. Aggregate operating results do not establish each project's success.
governance · 3/4 · Annual director terms, proxy access, separate chair and CEO positions, eight actual Audit Committee meetings and an unqualified auditor opinion on financial reporting controls provide concrete oversight evidence. These mechanisms do not establish exceptional governance or eliminate misconduct risk.
Evidence
At the end of 2024, our member renewal rates were 92.9% in the U.S.
MD&A / Membership Fees / 2024 renewal rates · Filed 09/10/2024
and Canada and 90.5% worldwide. Renewal rates benefited from higher penetration of Executive members.
MD&A / Membership Fees / worldwide renewals and Executive membership · Filed 09/10/2024
At the end of 2025, our member renewal rates were 92.3% in the U.S.
MD&A / Membership Fees / 2025 renewal rates · Filed 08/10/2025
and Canada and 89.8% worldwide. Renewal rates were negatively impacted by a higher number of memberships sold online,
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including through digital promotions, entering the renewal rate calculation.
MD&A / Membership Fees / worldwide renewals and digital acquisition · Filed 08/10/2025
At the end of 2026, member renewal rates were 92.3% in the U.S.
MD&A / Membership Fees / 2026 renewal rates · Filed 07/10/2026
and Canada and 89.8% worldwide.
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As previously reported, we increased annual membership fees in the U.S.
MD&A / Membership Fees / 2026 worldwide renewal rate · Filed 07/10/2026
Membership Fees
12 Weeks Ended
36 Weeks Ended
May 10,
2026
May 11,
2025
May 10,
2026
May 11,
2025
Membership fees
$
1,373
$
1,240
$
4,057
$
3,599
Total paid members (000s)
82,900
79,600
—
—
Total cardholders (000s)
148,500
142,800
—
—
Membership fee revenue increased 11% and 13% in the third quarter and first thirty-six weeks of 2026, driven by new member sign-ups, membership fee increases and upgrades to Executive Membership.
MD&A / Membership Fees / paid membership and fee revenue growth · Filed 03/06/2026
Effective September 1, 2024, we increased our membership fees in the U.S.
MD&A / Membership Fees / fee increase effective date · Filed 09/10/2024
and Canada for Gold Star (individual), Business, and Business affiliates to $65 per year.
MD&A / Membership Fees / annual membership price · Filed 09/10/2024
The Executive membership fee increased from $120 to $130 (membership fee of $65, plus Executive upgrade of $65), and the maximum annual 2% reward associated with the Executive Membership increased from $1,000 to $1,250.
MD&A / Membership Fees / Executive fee and reward changes · Filed 09/10/2024
Membership Fees
2026
2025
2024
Membership fees
$
5,907
$
5,323
$
4,828
Membership fee revenue increased 11% in 2026, driven by new member sign-ups, membership fee increases, and upgrades to Executive memberships.
MD&A / Membership Fees / 2024–2026 revenue and growth drivers · Filed 07/10/2026
The fee income increase accounted for approximately 30% and 40% of membership income growth during 2026 and 2025.
MD&A / Membership Fees / realized contribution from fee increases · Filed 07/10/2026
These products also generally carry higher margins than national brand products and represent a growing portion of our overall sales.
Risk Factors / Kirkland Signature / sales contribution and margins · Filed 07/10/2026
These members renew at a slightly lower rate on average.
MD&A / Membership Fees / lower renewal propensity of online members · Filed 08/10/2025
We compete for members, employees, sites, products and services, and in other important respects with a wide range of local, regional and national wholesalers and retailers, both in the United States and in foreign countries, including other warehouse-club operators, supermarkets, supercenters, online retailers, gasoline stations, pharmacies, hard discounters, department and specialty stores and operators selling a single category or narrow range of merchandise or services.
Risk Factors / competitive categories · Filed 07/10/2026
Such retailers and warehouse club operators compete vigorously and in a variety of ways, including pricing, selection and availability, services, location, convenience, store hours, and the attractiveness, and ease of use of websites and mobile applications.
Risk Factors / competition on price, selection and convenience · Filed 07/10/2026
The evolution of retailing in online and mobile channels has improved the ability of customers to comparison shop, which has enhanced competition.
Risk Factors / comparison shopping and competition · Filed 07/10/2026
AI may also present inaccurate pricing or product data, or fail to capture the full value of our membership offering, impacting member purchasing decisions by prioritizing immediate or inaccurate price comparison or logistics over member loyalty.
Risk Factors / potential AI effects on membership value perception · Filed 07/10/2026
If the Kirkland Signature brand experiences a loss of member acceptance or confidence, our sales and gross margin results could be adversely affected.
Risk Factors / potential loss of Kirkland acceptance · Filed 07/10/2026
2:25-cv-02277 (W.D. Wash.). Plaintiffs allege that the Company's Kirkland Signature tequilas are labeled “100% de Agave” but contain alcohol derived from non-agave sugars.
Legal Proceedings / Kirkland tequila labeling allegations · Filed 07/10/2026
We do not focus in the short-term on maximizing prices charged, but instead seek to maintain what we believe is a perception among our members of our “pricing authority” – consistently providing the most competitive values.
MD&A / management's pricing philosophy · Filed 03/06/2026
Our investments in merchandise pricing may include reducing prices on merchandise to drive sales or meet competition and holding prices steady despite cost increases instead of passing the increases on to our members, negatively impacting gross margin and gross margin as a percentage of net sales (gross margin percentage) in the near term.
MD&A / pricing investments and possible margin effects · Filed 03/06/2026
Gross Margin
2026
2025
2024
Net sales
$
297,247
$
269,912
$
249,625
Less merchandise costs
264,279
239,886
222,358
Gross margin
$
32,968
$
30,026
$
27,267
Gross margin percentage
11.09
%
11.12
%
10.92
%
Gross margin percentage decreased three basis points.
MD&A / Gross Margin / reported annual results · Filed 07/10/2026
Excluding the impact of gasoline price inflation on net sales, gross margin percentage was 11.22%, an increase of 10 basis points.
MD&A / Gross Margin / gasoline-adjusted annual result · Filed 07/10/2026
The gross margin in core merchandise categories when expressed as a percentage of their own sales increased 15 basis points.
MD&A / Gross Margin / core merchandise margin on own sales · Filed 07/10/2026
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The gross margin in core merchandise categories, when expressed as a percentage of core merchandise sales (rather than total net sales), decreased nine basis points.
MD&A / Gross Margin / third-quarter core merchandise margin on own sales · Filed 03/06/2026
IEEPA tariff refunds, net of investment in price reductions for members, positively impacted gross margin by three basis points.
MD&A / Gross Margin / tariff refunds and actual member price reductions · Filed 07/10/2026
Net cash provided by operating activities totaled $15,817 in 2026, compared to $13,335 in 2025.
MD&A / operating cash flow / 2026 and 2025 · Filed 07/10/2026
The latter was a result of faster inventory turns and improved payment terms with suppliers.
MD&A / operating cash flow / inventory turns and supplier terms · Filed 07/10/2026
In 2026, we spent $6,435 on capital expenditures, and it is our current intention to spend approximately $7,500 during fiscal 2027.
MD&A / capital expenditures / actual 2026 spending and 2027 intention · Filed 07/10/2026
Highlights for 2026 include:
•We opened 28 new warehouses, including three relocations, for a total of 25 net new warehouses: 18 in the U.S., five in our Canadian segment, and two in our Other International segment, compared to 27 new warehouses, including three relocations, in 2025;
MD&A / 2026 highlights / actual warehouse openings · Filed 07/10/2026
Earnings
Total
Equity
Shares (000’s)
Amount
BALANCE AT SEPTEMBER 3, 2023
442,793
$
2
$
7,340
$
(1,805)
$
19,521
$
25,058
Net income
—
—
—
—
7,367
7,367
Foreign-currency translation adjustment and other, net
—
—
—
(23)
—
(23)
Stock-based compensation
—
—
822
—
—
822
Release of vested restricted stock units (RSUs), including tax effects
1,337
—
(315)
—
—
(315)
Repurchases of common stock
(1,004)
—
(18)
—
(680)
(698)
Cash dividends declared
—
—
—
—
(8,589)
(8,589)
BALANCE AT SEPTEMBER 1, 2024
443,126
2
7,829
(1,828)
17,619
23,622
Net income
—
—
—
—
8,099
8,099
Foreign-currency translation adjustment and other, net
—
—
—
58
—
58
Stock-based compensation
—
—
864
—
—
864
Release of vested RSUs, including tax effects
1,054
—
(393)
—
—
(393)
Repurchases of common stock
(943)
—
(18)
—
(885)
(903)
Cash dividend declared
—
—
—
—
(2,183)
(2,183)
BALANCE AT AUGUST 31, 2025
443,237
2
8,282
(1,770)
22,650
29,164
Net income
—
—
—
—
9,226
9,226
Foreign-currency translation adjustment and other, net
—
—
—
150
—
150
Stock-based compensation
—
—
929
—
—
929
Release of vested RSUs, including tax effects
920
—
(361)
—
—
(361)
Repurchases of common stock
(891)
—
(20)
—
(827)
(847)
Cash dividend declared
—
—
—
—
(2,458)
(2,458)
BALANCE AT AUGUST 30, 2026
443,266
$
2
$
8,830
$
(1,620)
$
28,591
$
35,803
The accompanying notes are an integral part of these consolidated financial statements.
Consolidated Statements of Equity / earnings, dividends, equity issuance and repurchases · Filed 07/10/2026
The criteria for the fiscal 2025 performance-based grants were (versus fiscal 2024) a 3% increase in net sales or a 2% increase in pre-tax income (both adjusted for changes in foreign currencies).
Compensation Discussion and Analysis / fiscal 2025 performance conditions · Filed 04/12/2025
Accordingly, the executive officers who received performance-based grants earned all of the RSUs granted, subject to time-based and long-service vesting.
Compensation Discussion and Analysis / earned RSUs and remaining vesting conditions · Filed 04/12/2025
For awards vested on October 22, 2025, all other Named Executive Officers received 100% long-service vesting.
Compensation Discussion and Analysis / actual long-service vesting · Filed 04/12/2025
Stock Ownership Requirements
Executive officers are required by the end of each calendar year to own and retain shares of Company common stock representing in value at least three times (seven times for the Chief Executive Officer) the base salary of the officer in effect at the beginning of the fiscal year.
Compensation Discussion and Analysis / executive stock ownership requirements · Filed 04/12/2025
All executive officers were in compliance at the end of calendar 2024.
Compensation Discussion and Analysis / ownership compliance at calendar 2024 year-end · Filed 04/12/2025
Hedging and Pledging Policies
The Corporate Governance Guidelines prohibit transactions involving hedging of the Company's equity securities by directors, officers, and employees and prohibit pledging of the Company's equity securities by directors and executive officers.
Compensation Discussion and Analysis / hedging and pledging prohibitions · Filed 04/12/2025
Directors are elected annually for terms expiring at the next annual meeting of shareholders.
Election of Directors / annual director terms · Filed 04/12/2025
Our bylaws provide for proxy access shareholder nominations for director candidates by eligible shareholders.
Corporate Governance / shareholder proxy access · Filed 04/12/2025
Currently the positions of Chairman and Chief Executive Officer are filled separately.
Board Structure / separate chair and CEO positions · Filed 04/12/2025
The Audit Committee met eight times during fiscal 2025.
Committees of the Board / actual Audit Committee meetings · Filed 04/12/2025
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of August 30, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated October 6, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.
Independent auditor report / unqualified opinion on financial reporting controls · Filed 07/10/2026
Sales increased $17,136 or 8% in core merchandise categories, increasing in all categories.
MD&A / net sales / actual core merchandise growth · Filed 07/10/2026
We opened 12 new warehouses, including two relocations, in the first half of 2026, and plan to open 21 additional new warehouses, including three relocations, in the remainder of fiscal 2026.
MD&A / capital expenditure plans / earlier fiscal 2026 opening expectations · Filed 11/03/2026
