Costco's September Sales Show Digital Momentum, but Valuation Still Matters

Costco entered October with sales and membership trends that help explain why investors continue to award the warehouse retailer a premium valuation. The company reported September net sales of $30.02 billion for the five weeks ended October 4, up 13% from a year earlier. Digitally enabled sales rose 19%, showing that Costco's growth is no longer confined to warehouse traffic.

Membership economics remain the center of the story

Costco's fiscal fourth-quarter membership fee income increased 7.3% to $1.85 billion. Paid members reached 84.1 million, while Executive members rose 9.4% to 42.3 million. Executive members account for more than three quarters of sales, according to the original report, which makes their faster growth especially valuable: higher-tier members tend to spend more and generate steadier fee income.

The company also maintained high renewal rates, at 89.8% worldwide and 92.3% in the United States and Canada. Those figures matter more than a single month's sales because they indicate that customers continue to see value in the membership despite inflation and a higher fee introduced in 2024.

Digital growth broadens the model

September's 19% rise in digitally enabled sales includes purchases initiated on a device and fulfilled through warehouses, distribution centers or Costco Travel. The measure is broader than traditional e-commerce, but it still shows that mobile features, same-day delivery and a better connection between online and warehouse shopping are gaining traction.

Tigress Financial raised its Costco price target to $1,250 from $1,065 while keeping a Buy rating. That target was about 28% above the share price cited in the report. Investors should treat it as an analyst scenario, not as a forecast guaranteed by the sales data.

The investment question is whether Costco can keep translating traffic, digital adoption and Executive membership growth into earnings quickly enough to justify its valuation. September provided encouraging evidence on demand. The next earnings reports need to show that operating costs and expansion spending do not absorb too much of that growth.