Costco’s Membership Model Fuels Strong Valuation Ahead of Earnings

Costco Wholesale Corporation (COST) shares continue to demonstrate resilience despite recent minor pullbacks, with investors eyeing tomorrow's fiscal Q4 results. The warehouse retailer's 8% net sales growth preview suggests sustained momentum, driven by its unique membership-based model that thrives even in selective consumer environments.

Membership fees surged 10.4% to $1.24 billion last quarter, with 79.6 million paid households and exceptional 92.7% U.S. renewal rates. Executive members now drive 73% of sales, while delayed accounting impacts from fee increases promise tailwinds through fiscal 2026.

Same-store sales grew 8% in Q3, underscoring consistent traffic despite macroeconomic pressures. The model's recurring revenue stream and pricing power position Costco favorably against traditional retailers vulnerable to discretionary spending shifts.