By Katherine Hamilton

Costco Wholesale posted higher sales in its latest quarter, where it saw a split customer base willing to pay the highest and lowest prices.

Executives at the warehouse-club chain said that customers are starting to spend slightly more as inflation comes down, but many are gravitating toward the higher and lower price extremes. Among meat sales, for instance, it logged the largest increases in high-end cuts and cheaper, by-the-pound meats.

"We're focusing on the lower-priced protein while we're also focusing on the Wagyu," Chief Executive Ron Vachris said on the company's earnings call.

Costco also gained market share in gold and jewelry, gift cards, furniture and hardware. Those categories grew in the double digits, and were favorites for holiday gift-buyers, Vachris said.

The company on Thursday reported a 7.5% increase in sales for its fiscal first-quarter ended Nov. 24. Revenue from membership fees rose nearly 8% while e-commerce sales rose 13%, the retailer said.

Those top-line results helped the retailer turn in results ahead of Wall Street expectations.

For the quarter, Costco reported a profit of $1.8 billion, or $4.04 a share, compared with $1.6 billion, or $3.58 a share, a year earlier. Excluding a tax benefit related to stock-based compensation, Costco's earnings came in at $3.82 a share.

Analysts polled by FactSet expected earnings of $3.79 a share.

Revenue came in at $62.2 billion, ahead of the $62.05 billion expected by analysts. Same store sales 5.2%.

Costco's results come as other retailers have posted mixed results heading into the critical holiday season. Walmart last month said it was entering the holiday season with momentum, after strong back-to-school and Halloween sales, while Target cut its financial forecasts as its consumers exhibit more caution due to multiple years of price inflation.

This quarter marked the first that fully reflected Costco's higher fees, which went into effect on Sept. 1. The fees went up around 8% on new and renewing members. Costco last raised the fee in 2017.

The wholesaler logged $1.17 billion membership fees in the fourth quarter, up from $1.08 billion it made during the same period last year.

Chief Financial Officer Gary Millerchap said that the higher fees only had a slight effect on the quarter. Renewal rates came in at 92.8% in the U.S. and Canada, down slightly from a few months earlier. One reason is due to higher growth in digital signups, which renew at a slightly lower rate than overall, he said.

Shares of Costco ticked up slightly in late trading Thursday, after closing at $988.39, bringing year-to-date gains to nearly 50%.

Write to Katherine Hamilton at katherine.hamilton@wsj.com


(MORE TO FOLLOW) Dow Jones Newswires

12-12-24 1824ET