Company: COST
Filing Date: 2025-03-13
Form Type: 10-Q
Source: 0000909832-25-000015
Chunk: 52

Company: COSTCO WHOLESALE CORP /NEW
Filing Date: 2025-03-13
Form: 10-Q
Item: Item 8
Chunk 52
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 %8 %8 %Total paid members (000s)78,400 73,400 — — Total cardholders (000s)140,600 132,000 — — 

Membership fee revenue increased 7% and 8% in the second quarter and first half of 2025, primarily driven by new member sign-ups and the fee increase (discussed below). Changes in foreign currencies relative to the U.S. dollar negatively impacted membership fees by $22 and $23 in the second quarter and first half of 2025. At the end of the second quarter of 2025, our renewal rates were 93.0% in the U.S. and Canada and 90.5% worldwide. Our renewal rate, which excludes affiliates of Business members, is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date.

As previously reported, we increased our annual membership fees in the U.S. and Canada, effective September 1, 2024. We account for membership fee revenue on a deferred basis, recognized ratably over the one-year membership period. The recent membership fee increase contributed approximately 3% of membership fee revenue during the second quarter of 2025.

Gross Margin12 Weeks Ended24 Weeks EndedFebruary 16,2025February 18,2024February 16,2025February 18,2024Net sales$62,530 $57,331 $123,515$114,048Less merchandise costs55,744 51,140 109,853101,597Gross margin$6,786 $6,191 $13,662$12,451Gross margin percentage10.85 %10.80 %11.06 %10.92 %

Quarterly Results

Gross margin percentage increased five basis points. Excluding the impact of gasoline price deflation on net sales, gross margin percentage was 10.84%, an increase of four basis points. Gross margin percentage from warehouse ancillary and other businesses was flat, primarily due to an increase in e-commerce, partially offset by a decrease in our gasoline business. The LIFO impact was flat quarter over quarter. Changes in foreign currencies relative to the U.S. dollar negatively impacted gross margin by approximately $135, compared to the second quarter of 2024, attributable to our Other International and Canadian operations.

The gross margin in core merchandise categories, when expressed as a percentage of core