Nine Out of Ten Costco Members Renew: Inside the Metric That Powers a $14B Profit Engine

"Costco Wholesale Corp ( NASDAQ:COST) just reported something remarkable: a 92.3% renewal rate in the US and Canada, with 89.8% worldwide. That's not just a metric. It's the entire business model distilled into two numbers. Most retailers live and die by comparable sales or margin expansion. Costco's stickiness lives in membership renewal. When nine out of ten customers voluntarily write another check each year, you've built something Amazon.com Inc ( NASDAQ:AMZN) and Walmart Inc ( NYSE:WMT) can't easily replicate."

"Membership fees are nearly pure profit. Costco's 2.96% profit margin on merchandise sales looks anemic until you realize membership income grew 14% year-over-year. That high-margin recurring revenue subsidizes razor-thin retail pricing, which keeps members renewing. It's a flywheel, not a treadmill. CFO Gary Millerchip explained the recent dip from historical 93% levels: "The decline in renewal rates was largely attributable to a higher number of online sign-ups entering the renewal rate.""

"Bullish: Executive membership upgrades accelerating. Executive members grew 9.3% year-over-year and drive 74.2% of worldwide sales despite being only 47.7% of paid members. New perks like extended shopping hours and Instacart credits are driving upgrades. Bearish: If online-acquired members don't eventually match warehouse renewal rates, the mix shift could pressure the metric long-term. A 92% renewal rate means Costco doesn't just sell groceries. It sells a relationship customers choose to maintain year after year, creating predictable cash flow that funds expansion and shareholder returns."

Costco reported a 92.3% renewal rate in the US and Canada and an 89.8% renewal rate worldwide. Membership fees provide high-margin recurring income that offsets the company's low 2.96% merchandise profit margin and enables razor-thin retail pricing. Membership income grew 14% year-over-year, supporting the pricing flywheel and sustaining renewals. CFO Gary Millerchip attributed the slight decline from historical 93% levels to a larger share of online-acquired members, who skew younger and initially renew at lower rates. Executive memberships rose 9.3% year-over-year and account for 74.2% of worldwide sales. If online-acquired members underperform in renewals long-term, renewal metrics could face pressure.

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