Wall Street isn't thrilled about Costco Wholesale's (COST -1.64%) short-term growth potential. The warehouse retailing giant's latest sales report showed slowing demand trends that challenge the idea that Costco can keep boosting sales even as shoppers pull back on overall spending. The slowdown also raises questions about the timing of the next membership fee hike, which would provide an immediate boost to earnings.

Let's take a closer look at Costco's growth stumbles, which have pushed shares 15% lower in the past year, and whether the stock is still an attractive buy today.

The slowdown

Costco said in early April that comparable-store sales gains for the month of March landed at just 2.6%, after accounting for currency exchange rate swings. That result marked a slowdown from the previous month's 5.6% rate and represented one of the chain's weakest growth performances in years.

Most of the pressure appears to be coming from Costco's consumer discretionary sales, which include things like home furnishings, consumer electronics, and jewelry. These categories were down 15% in the previous quarter as shoppers tilted spending toward staples. Slowing inflation might be playing a role, too, as Costco's price leadership makes its value proposition clearer during times of rising prices. That value isn't as apparent when inflation slows.

Good news

The slowdown doesn't threaten Costco's wider growth prospects, though. The chain is likely still winning market share in the massive retailing industry. And its customer satisfaction has never been higher.

The chain's renewal rate ticked up to a record 92.6% last quarter, after all, and Costco boosted its global membership base by 7% into early 2023. That's the key metric to watch when you're judging Costco's long-term growth potential.

Is it a buy?

The biggest risk around a growth slowdown for the business is that it might convince Costco to delay its next membership fee hike. Those tend to occur about every five to six years, and it's about time for the next boost. The company's renewal rate suggests that shoppers will not balk at the increase, but Costco would prefer to roll out the hike when comps and traffic trends are strong. As a result, investors might have to wait a bit longer to see the chain raise its membership fees, which constitute the bulk of its annual earnings.

Yet that's no reason to abandon the stock. Costco's bullish investing thesis is intact, with steady membership and market share growth continuing in the wake of the pandemic.

Sure, Costco could endure a growth hangover as inflation cools and shoppers return to more normal spending patterns. But the chain has a clear path toward higher sales and earnings that relies on keeping subscribers happy. A drop in Costco's renewal rate would be a reason to worry on this score, but there's no sign of a change here.

In the meantime, the stock's price-to-sales ratio has dropped to below 1 thanks to a roughly 15% price decline since mid-April of 2022. Investors should see that discount as a good reason to take a closer look at this leading retailer.