Jim Cramer Says Costco Has A Membership Renewal Problem

According to CNBC, Jim Cramer said Thursday that something is wrong at Costco and that he plans to get to the bottom of it. He said the retailer needs near-perfect execution to support its valuation of almost 41 times forward earnings, and he pointed to slower membership growth, especially among younger online signups who are not renewing at the same pace as older in-store members. Costco reported a 5.4% increase in comparable sales for the four weeks ended Aug. 30, excluding gasoline prices and foreign exchange, while Wells Fargo said the figure would have been 6.2% after adjusting for the later Labor Day holiday, versus an expected 6.1%. The bank also said traffic decelerated 110 basis points and was below the trailing 12-month average. Costco shares were flat Thursday at $929 and are down 15% from their record high of nearly $1,097 in May.