Costco's Renewal Trends Point to Lasting Customer Loyalty

Costco Wholesale Corporation COST continues to demonstrate exceptional member retention across its global network, showcasing sustained brand engagement and customer trust. At the close of the third quarter of fiscal 2026, the company reported a robust U.S. and Canada membership renewal rate of 92.2%, representing a 10-basis-point increase from the preceding quarter. Meanwhile, the worldwide renewal rate held steady at an impressive 89.7%. 

These strong retention metrics highlight Costco’s effective management of changing member demographics. Management acknowledged that online sign-ups have historically renewed at slightly lower rates than warehouse enrollments, creating pressure on overall renewal metrics as digital adoption expands. However, the company said targeted digital communications and retention initiatives more than offset that headwind during the quarter, allowing renewal rates to stabilize despite the evolving member mix.

Membership engagement remains deep, reflected in the steady growth of premium tiers. Paid memberships increased 4.1% year over year to 82.9 million, executive memberships climbed 9.6% to 41.2 million, and membership income rose 10.7%, or 9.9% excluding foreign exchange. Executive members also accounted for 75% of total sales, underscoring the importance of Costco’s highest-value customers. The company also highlighted strong early adoption of executive memberships following the program’s launch in China.

Management also noted that executive membership growth reflected both upgrades by existing Gold Star members and a higher proportion of new members selecting the executive tier. These members typically shop more frequently and spend more than standard members. Together, stable renewal rates, improved retention among digitally acquired members and rising executive participation indicate that Costco’s membership base remains highly engaged.

How Walmart & BJ's Wholesale Compare With Costco

Walmart Inc. WMT is also seeing strong momentum in membership, reinforcing customer engagement across its ecosystem. In first-quarter fiscal 2027, Walmart reported a 17.4% increase in global membership fee revenues, while Walmart+ posted a record first-quarter high in net member additions. Management noted that Walmart+ members spend about four times more than non-members and make seven times more e-commerce visits, highlighting the program's growing contribution to recurring revenues and customer loyalty. 

BJ's Wholesale Club Holdings, Inc. BJ also continued to strengthen its membership business during first-quarter fiscal 2026. BJ's Wholesale reported a 9.9% year-over-year increase in membership fee income to $132.4 million, supported by solid membership acquisition, retention and higher-tier membership penetration across both new and existing clubs. Management said BJ's Wholesale remains focused on expanding its membership base while investing in growth, digital capabilities and club expansion to deepen long-term member engagement.

What the Latest Metrics Say About Costco

Costco has seen its shares tumble 6.1% over the past three months against the industry’s 0.6% rise. 
 

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From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 42.61, higher than the industry’s ratio of 31.43. However, it is trading below its 12-month median level of 45.94, indicating some moderation in valuation despite sustained investor confidence in the stock.
 

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The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 9.6% and 13.5%, respectively. For the next fiscal year, the consensus estimate indicates a 7.8% rise in sales and 10.2% growth in earnings.
 

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Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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