Walmart makes significantly more money than Costco, both in terms of overall revenue and operating profit margin. Walmart's revenue is nearly three times greater than Costco's.
Understanding the Financial Landscape
When evaluating which company "makes more money," it's crucial to consider various financial metrics. While Costco is renowned for its operational efficiency, Walmart's sheer scale and higher profit margins on products translate to substantially larger earnings.
Revenue Comparison
Walmart stands as the world's largest retailer by revenue. It generates almost three times the revenue of Costco. This vast difference in top-line sales is a primary indicator of who brings in more money overall. Walmart's expansive global presence, diverse product offerings, and multiple retail formats contribute to its dominant revenue figures.
Profitability Insights
Beyond just sales volume, profitability is a key measure of how much money a company keeps from its sales. Walmart also boasts a higher operating margin on the products it sells. Its operating margin is approximately 24.8%, which is considerably higher than Costco's operating margin of about 12.9%. This means that for every dollar of sales, Walmart retains a larger percentage as operating profit compared to Costco.
Efficiency vs. Overall Earnings
While Walmart leads in total revenue and operating margin, it's worth noting Costco's exceptional efficiency. Costco operates a highly efficient model, achieving significantly more sales per square foot (approximately 211% more) and demonstrating superior productivity from its workforce. This efficiency allows Costco to offer competitive prices and maintain profitability despite a lower operating margin. However, this higher efficiency per unit (square foot or employee) does not translate into higher total revenue or total operating profit compared to Walmart's massive scale.
Key Financial Snapshot: Walmart vs. Costco
| Financial Metric | Walmart | Costco |
|---|---|---|
| Revenue Scale | Significantly larger (almost 3x) | Smaller |
| Operating Margin | Higher (approx. 24.8%) | Lower (approx. 12.9%) |
| Sales per Square Foot | Lower | Higher (211% more productivity) |
In summary, while Costco excels in operational efficiency and maximizing sales from its physical footprint and employees, Walmart's colossal size and higher operating profit margins ensure it makes considerably more money overall.
