Costco Wholesale (NASDAQ:COST) is the leader in warehouse retail, with hundreds of stores worldwide and a highly successful membership model that's lured millions of people to shop from its offerings. Even as many have feared that e-commerce could be Costco's downfall, the company has continued to find ways to appeal to customers and promote its growth around the globe.

CFO Richard Galanti recently sat down with investment analysts to go over the retailer's most recent quarterly results. He highlighted a number of favorable things helping Costco right now, and following are his comments about a few of the most important ones for investors to know.

1. Costco's renewal rates are strong

Our U.S. and Canada membership renewal rate came in at 90.9%, up 0.2 percentage points from 90.7% as of the end of the last quarter. Worldwide, the renewal rate was 88.4%, up from 88.3% a quarter ago. Both of these figures [are] all-time highs.

Many critics of Costco believe that shoppers won't want to pay membership fees once they can get everything they need from competing e-commerce websites. However, Costco gives shoppers the experience of actually touching and seeing what they want to buy before they buy it, and Costco's own e-commerce presence has become an increasingly important part of the retailer's overall story. Certainly the renewal rates show no signs of customer discontent.

Costco store seen from outside, showing windows and red and blue name sign.

Image source: Costco Wholesale.

2. New members keep coming in

At fiscal year-end, we had 53.9 million member households. That's up from a quarter ago of 53.1 million.

Costco brought in roughly 800,000 net new members in just three months. On an annualized basis, that amounts to more than a 6% growth rate, and it even incorporates the churn of those who choose not to renew their memberships. Costco's value proposition remains important to its members, and the retailer's decisions with respect to store location, merchandise selection, and customer service seem to be working out and resonating with shoppers.

3. Costco saw solid gains for high-end executive memberships

Paid executive memberships totaled 20.8 million, which was an increase during the quarter of 362,000 or 23,000 a week.

Costco especially likes executive memberships because they produce larger amounts of revenue and encourage repeat business. A Gold Star executive membership costs $120 per year, or double what the regular membership fee is. In return for the extra fee, members earn a 2% reward on their purchases, with annual rewards topping out at $1,000. Executive members also get extra perks, including lower prices for identity protection services and free roadside assistance for vehicles covered by the company's auto insurance program. Keeping executive members happy is important for Costco, and bringing in so many new ones is a big vote of confidence.

4. Could another annual fee increase be on the way? Maybe, eventually.

During the fourth quarter, the 23-month cycle to recognize the incremental [profit and loss] benefit of the fee increases that began in June of 2017 was completed, and the impact in the Q4 results was almost zero, or less than $1 million benefit to the quarter.

It's been more than two years since Costco last announced a membership fee increase, and the warehouse retailer has seen growth in its membership fee income line slow as a result. Unless Costco boosts its annual fees again, future gains in membership fees will come solely from sustaining levels of new members coming in the door. The 2017 boost was the first time Costco had made increases since 2011, however, so an increase in the immediate future looks unlikely.

Keep watching Costco

Costco is optimistic about its future, especially in light of the positive reception the company's new store in Shanghai got. Chinese shoppers could be the means by which Costco can achieve its growth aspirations, and combined with other favorable tailwinds helping the warehouse retailer, now looks like a good time to keep your eyes on Costco.

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