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It’s pretty sweet to get that 2% cash back from your Costco membership every year, right? Well, imagine how the retail giant felt when its year-end results showed a 7.9% year over year increase in its membership rolls, not to mention a YoY gain of nearly $7 billion in net sales.
Some of those membership gains came in part from the 23 new warehouses Costco opened in the quarter, bringing the total to 861 worldwide. During an earnings call on Tuesday, CFO Richard Galanti cited the surges of new members that have come with the company’s expansion in Asia.
Customers are also making more trips: Shopping frequency was up 5% or more worldwide in the fourth quarter.
That’s been offset by weaker spending on big-ticket items—think TVs and jewelry—and lower gas prices. But the company also sees some hope of price deflation driving new sales.
“When we see $300 and $400 price declines because of freight and raw material cost on some big-ticket non-food items, we’ll see some of the sales pick back up on that. But there’s nothing guaranteed,” Galanti said.
Meanwhile, the company is trying to change its old store-centric model, which has strongly favored in-person shopping over virtual experiences.
“While still negative, relatively speaking, our e-commerce showed good improvement,” Galanti said. An updated mobile app has apparently transformed the user experience, taking Costco’’s app-store ratings from “a dismal 2.3 stars,” the CFO said, to 4.7 stars out of 5. That comes alongside 40% YoY growth in unique web visitors and a 46% leap in mobile installs from a year ago.
And like any good Costco store, the digital side is host to some real oddball items—like gold bars. “They’re typically gone within a few hours and we limit two per member,” Galanti said of the one-ounce gold bars.
So, what’s next? Galanti anticipates the company could add more than 150 locations in the US alone in the next 10 years. And if you’re wondering—yes, they might eventually increase that membership price so now's the time to stock up on gold bars.