Costco(US:COST) Nan Fang Du Shi Bao·2026-02-11 14:39Core Viewpoint - The court ruled that Costco's unilateral cancellation of a customer's membership constituted a breach of contract, leading to an appeal by Costco to overturn the decision [2][3][8]. Group 1: Legal Proceedings - A customer, Mr. Li, had his membership canceled by Costco after multiple complaints, which the court found to be a breach of contract [2][8]. - The first-instance court ordered Costco to continue fulfilling the contract and extend Mr. Li's membership by 96 days [3][8]. - Costco filed an appeal, arguing that its membership terms are legally binding and that the court misapplied the law regarding the cancellation of Mr. Li's membership [3][5]. Group 2: Membership Terms and Conditions - Costco claims that its membership terms allow for the cancellation of membership under certain conditions, including behavior deemed inappropriate [5][6]. - The specific clause cited by Costco states that it can cancel membership without refunding the annual fee if inappropriate behavior is detected [5][6]. - The court found that the clause granting Costco unilateral cancellation rights was a standard form contract that did not adequately inform Mr. Li of the implications, thus ruling it unenforceable [8]. Group 3: Company Background and Financials - Costco operates a membership-based warehouse model and entered the Chinese market in August 2019, currently having seven stores in various cities [5]. - The membership fee is set at 299 yuan per year, and as of the first quarter of fiscal year 2026, Costco reported revenues of $67.307 billion, a year-on-year increase of 8.3%, and a net profit of $2.001 billion, up 11.3% [5]. - As of November 23, 2025, Costco had 81.4 million paying members, reflecting a 5.2% increase [5].