Core Insights - Costco's business model is centered around membership, which generates a reliable revenue stream and fosters strong customer loyalty [2][3] - The company has seen significant growth in membership numbers, with total paid members reaching 81.4 million, a 5.2% increase year-over-year [8] - Costco's performance has been bolstered by the current economic climate, as high prices encourage more consumers to seek membership and purchase goods at discounted rates [4][11] Membership and Revenue - Membership fees are a crucial source of revenue, allowing Costco to maintain lower prices on merchandise compared to traditional retailers [3] - Membership income grew by 7.3% year-over-year, driven by an increase in the membership base and upgrades to higher-tier memberships [7] - The company reported net sales of $65.98 billion for the first quarter, an 8.2% increase from $60.99 billion the previous year [5] Economic Positioning - Analysts suggest that Costco is well-positioned to thrive in a struggling economy, alongside competitors like Amazon and Walmart, due to its focus on value and consumer staples [11] - The economic downturn may lead to increased membership sign-ups as consumers look for cost-effective shopping options [4][12] - Historical data indicates that during economic crises, Costco's revenue may drop due to a shift in product mix towards lower-margin items, although customer visits remain strong [13] Performance Metrics - At the end of Q1, Costco had 39.7 million paid executive memberships, a 9.1% increase year-over-year [8] - The renewal rate for U.S. and Canada members was 92.2%, while the worldwide renewal rate was 89.7%, reflecting a slight decline [8][9] - The decline in renewal rates is attributed to a higher percentage of new online members, who renew at a lower rate compared to traditional warehouse sign-ups [9][10]

Core Insights - Costco Wholesale Corporation and BJ's Wholesale Club operate in the warehouse retail space, with Costco having a market capitalization of approximately $396.6 billion and BJ's at roughly $11.8 billion [1][2] - Both companies are navigating a challenging consumer environment characterized by tighter budgets, with Costco leveraging its global scale and BJ's focusing on operational efficiency and market-specific execution [3] Costco's Strengths - Costco's membership-based business model provides a steady revenue stream, with membership renewal rates of 92.3% in the U.S. and Canada and 89.8% worldwide in Q4 of fiscal 2025 [3][4] - The company reported a 14% increase in membership fee income to $1,724 million in the quarter [3] - Costco's net sales for October increased by 8.6% year-over-year to $21.75 billion, demonstrating its ability to adapt to changing consumer preferences [5] - Digitally-enabled comparable sales surged by 16.6% in October, reflecting the effectiveness of Costco's digital initiatives [6] BJ's Wholesale Strengths - BJ's Wholesale has a membership-driven model with a tenured renewal rate of 90% and a higher-tier penetration level of 41%, ending Q3 of fiscal 2025 with 8 million members [7] - The company reported a 30% increase in digitally enabled comparable sales, driven by its focus on convenience and digital engagement [9] - BJ's continues to invest in curated assortments and fresh offerings, enhancing its competitive position against national brands [10] Sales and Earnings Estimates - The Zacks Consensus Estimate for Costco's current fiscal-year sales and EPS indicates year-over-year growth of 7.7% and 11%, respectively [13] - For BJ's Wholesale, the current financial-year sales and EPS estimates imply year-over-year growth of 4.5% and 7.4%, respectively [15] Stock Performance and Valuation - Costco shares have decreased by 12.2% over the past six months, while BJ's Wholesale has seen a steeper decline of 22.3% [18] - Costco's forward P/E ratio is 43.85, below its one-year median of 50.09, while BJ's stands at 19.37, below its median of 23.60 [19] Investment Outlook - Both companies carry a Zacks Rank 3 (Hold), but Costco is viewed as the stronger investment option due to its broader scale, strong member loyalty, and consistent execution in challenging consumer conditions [21]

Core Insights - Costco Wholesale Corporation (COST) has a market capitalization of approximately $444.3 billion and operates 905 warehouses globally, while BJ's Wholesale Club Holdings, Inc. (BJ) has a market capitalization of around $15.1 billion with 255 clubs and 190 gas locations [1][2] - Costco's membership renewal rates are high at 92.7% in the U.S. and Canada, and 90.2% globally, contributing to its competitive pricing and operational efficiency [3][4] - BJ's is expanding its footprint and refining its value proposition through localized assortments and digital capabilities, achieving an 8.1% increase in membership fee income in Q1 fiscal 2025 [2][9] Costco's Strengths - Costco's membership model ensures a reliable revenue stream, with membership fee income rising 10.4% year-over-year in Q3 fiscal 2025, and a total of 79.6 million paid household members, a 6.8% increase [4][3] - The company plans to open 27 new warehouses in fiscal 2025, increasing its global count to 914 [5] - E-commerce sales grew by 14.8% in Q3, with logistics deliveries up 31%, indicating strong online demand [6] BJ's Growth Strategy - BJ's focuses on marketing and merchandising, targeting high-growth regions and expanding its own-brand portfolio [8] - The company achieved a 35% increase in digitally enabled sales in Q1 fiscal 2025 and plans to add 25-30 new clubs over the next two years [11][12] - BJ's membership fee income reached $120.4 million in Q1, reflecting a strong membership base with a 90% tenured renewal rate [9][10] Financial Estimates - The Zacks Consensus Estimate for Costco's current fiscal year sales suggests an 8.1% year-over-year growth, with EPS expected to grow by 12% [14][15] - For BJ's, the current fiscal year sales estimate indicates a 5.5% growth, with EPS growth projected at 6.2% [16] Stock Performance and Valuation - Over the past three months, Costco's shares have advanced by 7.7%, while BJ's shares have risen by 3.2% [18] - Costco's forward P/E ratio is 51.19, compared to BJ's 25.62, indicating a higher valuation for Costco [19] Investment Outlook - Costco is viewed as a more compelling investment choice due to its global scale, customer loyalty, and consistent performance, while BJ's shows promise through expansion and digital innovation [21]