Costco Wholesale (NASDAQ:COST) takes some of the drama out of its quarterly earnings report releases by putting out sales numbers every month.

That tends to lessen the surprises, because while there can be dramatic month-to-month shifts in some businesses, the nature of how the warehouse club operates makes that less likely. Costco succeeds or fails based on long-term membership trends, and while two months of sales don't directly speak to renewal or signup rates, they offer a strong hint.

Heading into its Q2 earnings report on March 2, the company has already let investors know that in December, if you factor out changes in the price of gasoline, sales for the entire company increased by 3%, the same number they grew by in the United States. January results were even better, with both overall sales and domestic sales posting a 5% increase.

It's unlikely that February contains a massive change, either positive or negative, but that doesn't mean investors have nothing to watch when the company reports. Instead shareholders need to focus on the bigger picture, and examine membership trends while also taking a close look at the company's online sales.

A turtle races some rabbits and is slightly ahead.

Costco may be slow and steady, but it has consistently reported solid results. Image source: Getty Images.

Membership is the core of Costco

While increasing sales suggest both an increase in buying by existing members and the addition of new ones, that does not have to be the case. In addition, there are some nuances in the chain's renewal and signup numbers worth watching.

The overall membership number is important, and it inched up from 47.6 million in Q4 to 47.9 million at the end of Q1 2017. Since most accounts have two cards, the number of cardholders actually grew from 86.7 million at the end of the company's fiscal year to 87.3 million when Q1 closed.

An even more important metric may be the growth of the chain's executive membership program, which CFO Richard Galanti elaborated on in the Q1 earnings call:

At the November 20 first quarter end, executive members stood at 17.7 million member households, an increase of 348,000 since the end of the previous quarter. That's about 29,000 additional executive members per week increase during the 12-week quarter. As I've said before, executive members are a little over third of our base and a little bit more than two-thirds of our sales where executive members are offered.

It's worth noting that the increase in executive memberships was more than the total number of new members added -- some renewing members are upgrading their memberships from the $55 basic "Gold Star" level to the $110 executive membership. That suggests increased loyalty and an intention to spend more, since the pricier membership comes with 2% cash back on Costco purchases.

Online sales are starting to matter

Costco has succeeded where other retailers have failed by focusing on its warehouses rather than on digital sales. Between its unique membership model and its stores being destinations where shopping is part entertainment, it has largely remained immune to online competition.

During the Q1 earnings call, however, Galanti noted that online sales were up 8% in the quarter. He also showed a new interest in growing the chain's digital business:

As it relates to our online business, we are improving our offerings and enhancing our member experience. ... Our current focus comes in three primary areas in terms of improving merchandise first: We are adding more exciting high-end brand[s] in merchandise on an everyday basis, we are improving in stocks and high-velocity items, and there [are] a few other things that we will be doing coming in the first couple of months of the new calendar year.

The CFO also explained that Costco was working to improve how its site works and improving its distribution plan, including shipping orders from more locations. He said that the chain was committed to improving search, while also shortening the number of steps required to check out. In addition, Galanti noted, the company has begun "simplifying and automating our returns process," including improving the experience when consumers seek to return a big-ticket item.

Slow and steady

While other retailers are working quickly to respond to declining sales, Costco moves ever-slowly forward. In recent quarters the company has become perhaps a turtle in a hurry rather than one taking its time, but it's still taking the "slow and steady wins the race" approach that has long paid off for it.

Changes to Costco's membership numbers or the breakdown of the membership types customers are buying will give shareholders a long-term window into where the company stands. Similarly, online growth would be a very positive sign that a chain which has not really needed the internet may be able to transition some of its business there, if a day comes when consumers decide they won't venture out to shop as often -- even at Costco.

These are long-term things to watch for at a company which has consistently moved its business forward. Surprises are unlikely, but these metrics will provide a look at whether the warehouse club will stay the course, or whether changes might be needed.