1 Number That Shows Why Costco Wholesale Corporation Is the Best Retailer Around

It wouldn't be easy to pick a single reason Costco is one of the best retailing stocks on the market. But I'd offer these three candidates for the short list: a membership fee-driven business model, a generous dividend policy, and the potential for strong warehouse expansion, particularly in overseas markets.

Yet if you want to look at just one number to see how well Costco is performing when stacked up against rivals, focus on comparable-store sales growth. The bulk retailer has posted 6% or higher comps in every fiscal year going back to 2011:

Comps exclude gasoline sales and foreign exchange movements. 2015 is through the first three quarters of this fiscal year. Source: Costco financial filings.

Keeping competitors off balance By comparison, other big retailers such as Targetand Wal-Mart's Sam's Club are logging comps growth of between 1% and 2% right now. Costco has been stealing market share from these and other national, regional, and local competitors for several years running. Most recently, it has set its sights on the organic food grocery segment and quickly built that out into a $3 billion annual business.

Source: The Motley Fool.

The outperformance boils down to surging customer traffic. Costco logged 4% higher shopper transactions last quarter -- more than double the growth at Target or Sam's Club.

And we're not just talking about a temporary spike of members craving that $1.50 hot dog lunch combo. Instead, Costco has been increasing its shopper traffic level by 4% each year for six years running.

Keeping customers happyCostco's growing base of Costco's extra-happy customers is driving that market-thumping traffic gain. The company dominated this year's survey from the American Consumer Satisfaction Index by nabbing a first-place 84 score out of 100. Shoppers praised Costco for keeping its prices low even as rising costs forced grocery, apparel, and electronics competitors to jack prices up by as much as 3% last year.

Rising customer satisfaction shows up in Costco's membership renewal rate, which is also marching further into record territory. Subscribers can cancel their annual membership at any time during the year for a full -- not prorated -- refund. Yet a ridiculously small proportion of shoppers actually take Costco up on that generous offer. The company's renewal rate has improved in each of the past five fiscal years and is now sitting above 90%:

Renewal rate for U.S. members by fiscal year. Source: Costco financial filings.

Since Costco is a membership club first, and a retailer second, the renewal rate is critical to the businesses' success and in fact powers the majority of profit generation (75% of earnings in the last fiscal year).

Can the company keep it up?Chief Financial Officer Richard Galanti was asked in last quarter's conference call about how long Costco's unusually strong traffic growth can continue. Here's what he had to say:

The future length of Costco's string of 6% comps gains has more to do with the health of the economy than anything else. But rising customer traffic is likely to be the basis for extra market share improvement in the years ahead. The good news for investors is that Costco has demonstrated how it can succeed there by focusing on turning more of its members into enthusiastic repeat shoppers.

The article 1 Number That Shows Why Costco Wholesale Corporation Is the Best Retailer Around originally appeared on Fool.com.

Demitrios Kalogeropoulos owns shares of Costco Wholesale. The Motley Fool owns and recommends Costco Wholesale. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.