There is no doubt that Costco (COST) has rapidly expanded in popularity over the past few years, thanks to its products and deals consistently going viral on social media platforms such as TikTok.
Even in the past few months, Costco has seen a significant boost in sales, despite last year’s membership price hike and further cracking down on membership card sharing.
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In its latest earnings report, Costco revealed that its comparable sales in the U.S. increased by 8.3% year-over-year during the second quarter of fiscal year 2025. This contributed to its earning a net income of $1.7 billion, which is 2% higher than what it earned during the same quarter a year ago.
Related: Costco makes a major change to a convenient membership perk
Despite a boost in sales, Costco Chief Financial Officer Gary Millerchip warned during an earnings call in March that Costco members are becoming more cautious about their spending amid concerns about the economy.
“We believe that the member is probably as much focused now on quality, value, and newness as they have been for quite some time,” said Millerchip. “They are still showing that willingness to spend, but they’re being very choiceful where they’re spending their dollars. And we think that’s likely to continue and maybe even become more choiceful as the impact of some return of inflation and the potential impact of tariffs could flow through as well.”
Costco embraces a controversial consumer trend.
Image source: Ting Shen/Xinhua via Getty) (Xinhua/ via Getty Images
Costco quietly makes a bold move
As customers pull back their spending, Costco is planning to lean even more toward a controversial trend that can help it reverse recent shopper behavior.
Costco has entered an online partnership with “buy now, pay later” company Affirm to allow its members to pay for items over time, according to a new shareholder letter. This means that Costco members will soon be able to pay for items through a monthly payment plan offered through Affirm.
During an earnings call on May 8, Affirm CEO Max Levchin opted to keep the launch date of the new online partnership with Costco under wraps.
Related: Costco makes controversial move to avoid high tariff costs
“I don’t think we are announcing a timeline, but obviously wouldn’t talk about it if we didn’t think that will be at some point in a reasonable future,” said Levchin.
Costco already offers a buy now, pay later option called Flex Pay through its partnership with Citi Bank; however, it is currently only available for Costco Anywhere Visa Card members.
Through Flex Pay, cardholders are able to split eligible purchases of $75 or more into fixed monthly payments (no interest) of up to 24 months.
‘Buy now, pay later’ can have major risks
The move from Costco comes when “buy now, pay later” has grown in popularity, as many consumers battle inflation and higher costs of living. Companies such as Klarna, Paypal Pay, and Afterpay are known for offering this service.
Many of these companies have recently partnered with retailers such as Target, Walmart, Amazon, and even DoorDash to offer consumers “buy now, pay later” options.
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While this service can be convenient for shoppers, it can have major consequences if not used cautiously.
A new survey from Bankrate found that 30% of U.S. adults have used at least one “buy now, pay later” service to purchase a product. Also, 49% of the adults who have used the service said that they have encountered at least one issue with it.
Roughly 24% said that they spent more money than they should using the service, while 16% said they missed a payment, and 15% said they regretted making the purchase.
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