Dive Brief:

• Costco on Wednesday failed to report quarterly U.S. same-store sales growth for the first time in six years: Sales were flat in the warehouse retailer's fiscal third quarter, missing the 1.9% increase expected by analysts. Excluding negative impacts from lower gas prices and the strong dollar, however, U.S. same-store sales rose 3%, 8% in Canada and 3% in other countries over the quarter.

• Companywide, Costco's same-store Q3 sales rose 3%, falling short of the 4.6% increase expected by analysts. The company experienced healthy traffic in the quarter and average transition value rose 2.5%, excluding fuel sales and currency fluctuations. Sales of memberships, Costco’s primary path to profits, rose to $584 million from $561 million a year earlier.

• Costco posted Q3 profit of $545 million, growing 5.6% year over year. Earnings per share were $1.24, up from $1.17 in the year-ago quarter, and revenue rose 2.6 percent to $26.7 billion from $26.1 billion a year earlier. Wall Street analysts had expected earnings per share of $1.22 on revenue of $27.07 billion, according to Thomson Reuters.

Dive Insight:

While Costco missed on core same-store sales in the U.S., several factors still bode well for the warehouse retailer. It’s protected by its membership sales, which did rise, and the fact that it continues to resonate with wealthier shoppers, especially compared to Wal-Mart. 

Costco’s key competitor, Wal-Mart’s Sam’s Club warehouse stores, saw its membership rise 3.9% in the quarter, compared to Costco’s 5.6%. 

Costco’s troubles derive largely from an underperforming April, which hit the retailer (and many others) on sales of cold-weather apparel, and from its credit card switch away from American Express—both factors that will diminish sharply in the quarters ahead. In fact, Costco's new Visa credit card could ultimately boost its bottom line. 

Cheaper fuel prices—which represent 10% of Costco’s sales, according to the company—were also a factor in the quarter, and could make things worse for the retailer as it adds more gas pumps. That could change if fuel prices continue to rise, as they are now. 

UBS analyst Michael Lasser anticipates that Costco will likely raise its annual membership fee next year. Lasser said the warehouse retailer could increase its basic annual Gold Star Membership to $60 from $55 and its Executive Membership annual fee to $120 from $110.

Lasser noted that Costco has historically increased membership fees roughly every five to six years, with the last hike coming in November 2011. "If its [competition] were to dramatically slow in the meantime or if there were some major macro disruption, it might delay this increase," Lasser wrote. "But, it sounds like that's not likely." Costco CFO Richard Galanti subsequently told The Huffington Post “We have not announced if, or when, we would increase our annual membership fee.”