In the first quarter of the 2026 fiscal year (12 weeks from September to November 2025), the popular American warehouse retailer Costco excelled in sales, membership numbers, and popular items in the food court, highlighting the ongoing trend of this retail giant’s ability to attract members. Despite high prices, it seems to work in favor of Costco.
For Costco’s business strategy, the key to success lies in keeping members satisfied. The retailer’s management closely monitors membership numbers, and if renewal and new member registrations remain stable, they can make adjustments to ensure smooth operations.
Costco’s business model is quite straightforward. According to Zacks.com, “Costco’s success is built on a membership-based business model, generating steady revenue and fostering strong customer loyalty. Members pay an annual fee for entry into Costco’s stores, where they can purchase items at significant discounts. This model not only ensures a steady revenue stream but also creates a sense of exclusivity and value among members.”
Membership fees provide Costco with a stable source of income, enabling them to lock in profits and maintain lower price markups on many items compared to traditional retail competitors.
CNBC reports that “Costco relies heavily on membership fees for most of its revenue growth and helps keep prices low on products.”
In the face of high prices in the United States, it turns out to be beneficial for Costco. Krieg Tidemann, assistant professor of economics at Niagara University, told Cheapism that high prices and economic slowdown are advantageous for Costco.
Tidemann said, “More households may be drawn to purchasing Costco memberships and acquiring most of their goods from this retailer, especially in times of high prices and economic pressure affecting consumers’ disposable income and savings.”
On December 11th, Costco released its first-quarter financial report, surpassing Wall Street’s expectations thanks to the growth in online sales and new store openings. Revenue increased by 8.2% compared to the same period last year, rising from $609.9 billion to $659.8 billion. The transition to e-commerce has been successful with a 20.5% increase in online sales.
Chief Financial Officer Gary Millerchip stated during the first-quarter earnings call that this model has proved effective as the chain’s membership numbers continue to grow, setting three records in the first quarter.
Millerchip shared some insights highlighting Costco’s strong performance. He stated during the earnings call, “Before we dig into the detailed performance of core items in the first quarter, here are some interesting facts about the holiday shopping season so far.”
Costco’s U.S. food court set a new single-day sales record on Halloween, selling 358,000 whole pizzas, a 31% increase from the previous year.
Black Friday was a record-breaking day for Costco’s U.S. e-commerce business, with non-food orders exceeding $250 million.
In the three days before Thanksgiving, Costco’s U.S. bakery department also set a record by selling 4.5 million pies, averaging over 7,000 pies per store in that period.
Millerchip noted during the call, “Excluding the increase in membership fees and currency factors, membership income grew by 7.3% year-on-year. This is due to the continued growth of the membership base and an increase in the number of regular members upgrading to premium members.”
The company continues to succeed in developing premium memberships with a $130 annual fee. Most premium members receive a 2% cashback on their purchases, with a maximum cashback of $1,250.
He added, “As of the end of the first quarter, we have 39.7 million paid premium members, a 9.1% increase from last year. At the end of the quarter, we had a total of 81.4 million paid members, a 5.2% increase from last year, with a total cardholder count of 105.9 million, a 5.1% increase year-on-year. As for renewal rates, as of the end of the first quarter, our renewal rate in the United States and Canada was 92.2%. The global renewal rate was 89.7%.”