Costco Has News on Membership Fee and Store Prices
There is good news for Costco fans! While retailers everywhere are raising prices galore, Costco plans to keep some of there prices the same. They do not plan to raise the annual membership fee from $60 for a standard fee. Also, the executive level fee will remain at $120 per year. Costco reported quarterly earnings that have surpassed expectations. They typically raise the fee every 5 to 7 years. The last time there was an increase was in 2017.
In a call with investors on Thursday, Richard Galanti (Costco’s CFO) stated the company has not met the benchmark it routinely follows to decide when to increase the membership cost, according to CNBC.
Costco’s biggest rival Sam’s Club raised the annual membership fee. However, Sam’s Club membership is cheaper overall. Starting in October, the cost of a Sam’s Club membership will increase $5 a year from $45 to $50. This is the first increase in nine years. Sam’s Club is owned by Walmart.
Due to higher costs correlated to inflation, Costco has increased some prices at its food court. However, Costco is not raising the price of the famous hot dog and soda. The price will remain at $1.50 for now. Costco CFO Richard Galanti repeated the cheap price point on this customer favorite super deal during the company’s fourth quarter earnings call on Thursday.
An analyst inquired if Costco was adjusting prices in other business areas to maintain sales margins for its hot dog-and-soda deal and other value buys.
“Lightning just struck me,” Galanti joked when the hot dog combination was raised. He stated that higher-profit business units such as gas and travel proceeds help Costco maintain its value deals.
“Those things help us be more aggressive in other areas, or as you mentioned, hold the price on the hot dog and the soda a little longer – forever,” Galanti added.
Galanti approximated the rate of inflation at Costco was about 8% during the fourth quarter, with increases “a little higher on the food and sundries side.”