Costco back to growth with improved customer loyalty

After a couple of lower growth quarters, Costco reported once more robust growth of +9,5%. This growth put Costco’s fiscal 2022/2023 full-year revenues beyond $240 billion. This is almost $100 billion more than in the pre-pandemic Q2/2019.

The more notable part of the Costco growth was a rapid uptick in the membership fees, which were up by +13,7%.

The company reported admirably high renewal rates for the memberships of 92,7% in North America and 90,4% Internationally.

This, combined with improved margins, led the company to 16,8% increase in Operating profitability +15% growth in Net income.

This was partly helped by the reduced inventory levels, which declined by -7%. Costco operates at a different level of inventories than its main rivals, with 6,9% of annual revenue. Walmart operates at around 9%, whereas Target surpasses 11% and Home Depot closer to 15%.

Strong numbers from Costco illustrate the robustness of the Costco business model. After four quarters of declining growth, the company was able to accelerate growth.

The membership's high renewal and growth numbers are even more important statements from customers about the viability of the Costco business model.