Costco Membership Income Up 14% with Renewals at 92.3% US/Canada, 89.8% Global
Costco’s membership income increased 14% year-on-year in Q1 FY26, with renewals operating as nearly pure profit alongside a 2.96% merchandise margin. Renewal rates reached 92.3% in the US and Canada and 89.8% globally, while executive memberships grew 9.3% YoY and now drive 74.2% of sales despite representing 47.7% of members.
1. Membership Fee Revenue Jumps 14% in Q1 FY26
Costco’s membership income surged 14% year-over-year in the first quarter of fiscal 2026, reaching a record level of approximately $4.2 billion. This growth remains nearly pure profit, as membership fees carry minimal direct costs. The incremental cash flow from memberships continues to subsidize Costco’s razor-thin merchandise margins, which averaged just under 3% over the period. Such predictable, high-margin revenue underpins the company’s ability to invest in new warehouses, technology enhancements and share repurchases without sacrificing its low-price value proposition.
2. Renewal Rates Hold Above 89% Globally
The latest renewal statistics show that 92.3% of U.S. and Canadian members renewed their memberships, while the global renewal rate stood at 89.8%. These figures compare favorably to historical norms of roughly 93%, demonstrating remarkable customer loyalty in a competitive retail environment. Renewal stickiness supports stable year-over-year fee income and signals resilience in both mature and emerging markets. Costco’s retention rates contrast sharply with peers, where one-off promotions and couponing often drive membership churn.
3. Executive Membership Growth Fuels 74% of Sales
Executive memberships, which carry a higher annual fee in exchange for a 2% reward on purchases, grew 9.3% year-over-year and now account for 47.7% of paid members. Critically, these members generate 74.2% of total sales, reflecting their higher average basket size. New perks such as extended early shopping hours, expanded Instacart credits and curated sampling events have driven upgrades. Management indicated that further personalization of benefits could sustain this growth trajectory and enhance member lifetime value.
4. Digital Acquisition and Long-Term Renewal Outlook
CFO Gary Millerchip noted that a larger share of recent renewals included members who initially signed up online, a demographic that skews younger and renews at slightly lower rates in early years. Nearly half of all new online members are under 40, presenting a trade-off between short-term renewal dips and decades of future fee income. Investors will monitor whether digital-acquired cohorts eventually match the 93% renewal threshold seen in warehouse-acquired members, as any persistent gap could modestly pressure membership fee growth over time.