Costco Wholesale's Sales Are Increasing Modestly, But 1 Part of the Business Is Gaining Much Faster

Core Insights - Costco Wholesale operates 905 locations, with 624 in the U.S., generating nearly $62 billion in net sales in Q3 2025, averaging around$68 million in quarterly net sales per location, indicating strong performance in physical retail [1][2] - Despite substantial sales, Costco's same-store sales growth was less than 6% in Q3, reflecting the challenges of growth at a larger scale [4] - The company has significant growth potential in its e-commerce segment, with net sales growth of nearly 15% in Q3 and over 16% for the first three quarters of fiscal 2025, outpacing overall business growth [6] E-commerce and Digital Growth - Costco's partnership with Affirm aims to enhance digital transactions through buy now, pay later options, which can drive e-commerce sales [7] - The growth of Costco's digital business is expected to improve profit margins, as the company can track customer purchases effectively through membership accounts [8] - Advertising revenue generated from personalized marketing efforts allows Costco to maintain low prices for its members, reinforcing its low-price leadership strategy [10] Membership and Retention - Costco's membership retention rate was close to 93% in Q3, indicating strong customer loyalty, which is crucial for its business model [12] - Membership growth was only 7% in Q3, but an increase in membership prices led to a more than 10% year-over-year increase in membership income, contributing significantly to overall profits [13] - The company's ability to keep prices low while growing its digital efforts supports its membership-based business model, which is vital for long-term investment success [14]