Costco (COST -0.44%) recently gave investors a few reasons to feel optimistic about its business heading into the new fiscal year. Sure, sales trends are slowing from their pandemic peaks in late spring. But the warehouse giant is having no trouble keeping members engaged, both in stores and online.

In a conference call with Wall Street analysts, CFO Richard Galanti broke down the key metrics supporting Costco's growth even as rivals like Walmart (NYSE: WMT) and BJ's Wholesale (NYSE: BJ) ramp up their competitive challenges. Below are a few highlights from that presentation.

A woman shops for meat at a supermarket.

Image source: Getty Images.

Growing engagement

"Shopping frequency on a worldwide basis was down 1.2% during the fourth quarter and showed an increase of 1.2% in the U.S.," Galanti said. "Our average transaction ... size was up 12.7% during the fourth quarter, notwithstanding the negative impacts from gas deflation and [exchange rate shifts]."

While investors already knew the top-line 14% growth figure thanks to Costco's monthly release of sales metrics, the company added some important context to that result. It consisted of a low double-digit boost in average spending, pared back by slight customer traffic declines on a global basis. Costco's core U.S. segment increased traffic by 1.2% even as consumers spent much more heavily during each visit.

Galanti said that boost might have been supported by the chain's success at making shoppers feel safe. Costco was one of the first national retailers to require masks, for example, and it can maximize social distancing thanks to its warehouse selling approach. "People feel more comfortable coming into a place where masks are required," he said, "[and] where the physical spaces are larger with more open air."

Surprising strength

"We [were] a little surprised by the strength in many of these discretionary nonfood categories: things for the house and big-ticket items," Galanti said. "Again, not only furniture for the inside the house, but patio furniture."

Costco posted strong sales for staples like fresh food and pantry items. But executives said they were surprised with spiking demand for more-indulgent purchases like home decorations, TVs, computers, and appliances.

Customers increasingly turned to its e-commerce channel for these products. That segment more than doubled in the period, Galanti said, if you include third-party delivered fresh groceries. Costco's reported digital growth was 91%, compared with the 97% that Walmart recently announced. "As people are spending less on travel ... and dining out, they have redirected some of those dollars to categories like lawn and garden, furniture," Galanti said.

Cautiously optimistic

"Our most recent three-plus-month history has given us some comfort at this point," Galanti said. "Now as soon as I say that, things may change, but, you know, at this juncture, we feel very good about what it looks like going forward."

Investors will continue to get monthly sales updates that show whether factors like continued COVID-19 outbreaks or the current recession are hurting the business. Costco also sees a few modest supply challenges for the Halloween and Christmas shopping seasons.

But through early September at least, the chain appears on track to keep expanding sales across its wide portfolio of products, both in stores and online. Looking further out, investors should see a solid boost in membership (and fee income) over the next year or so as Costco launches as many as 20 new warehouses. That figure was just 13 in fiscal 2020 as the coronavirus pushed several openings into the new year.