Costco holds membership fees… for now
- Costco discussed the possibility of a hike in membership fees during its third-quarter investment call.
- While the retailer hasn’t specified a timeline, CFO Richard Galanti said it wasn’t ready to do so just yet.
- “We feel that it's incumbent upon us to be that beacon of light to our members in terms of holding them for right now,” Galanti said.
Costco will hike membership fees but will hold off for now, according to the retailer’s latest earnings call.
In a May 25 call with investors discussing its third-quarter earnings, Costco CFO Richard Galanti said the wholesale club wasn’t yet ready to hike membership costs to offset pressures from inflation.
“At the end of the day, with the headline being inflation, we feel very good about if we want to do it, can we do it without impacting, in any meaningful way, renewal rates or sign-ups or anything,” he said.
“And at some point, we will,” Galanti added. “But our view right now is that we've got enough leverage out there to drive business, and we feel that it's incumbent upon us to be that beacon of light to our members in terms of holding them for right now. It's not a matter of a big time, but we'll let you know as soon as we know.”
The price of Costco’s Gold Star membership was last raised in 2017 when the retailer increased the annual cost by $5, from $55 to $60. Its higher-tier executive membership costs shoppers $120 annually. Costco’s leadership during the past several quarters has indicated customers would eventually see a membership fee increase, though it hasn’t yet shared a timeline.
The company typically increases the price of its memberships every 4-5 years. Costco competitor, Walmart-owned Sam’s Club, last year raised prices on its annual memberships from $45 per year to $50 per year for its standard membership and from $100 to $110 for its “Plus” higher-tier membership. It was the first time Sam’s Club increased its membership prices in nearly a decade.
Costco’s net sales in the third quarter, ending May 7, increased to $52.6 billion, up 1.9% from the same quarter last year. Globally, same-store sales were basically flat with a 0.3% increase compared to an anticipated 2.9% increase. E-commerce sales declined 10% in the quarter compared to last year, which Galanti attributed largely to overall declines in big-ticket item sales (down 20% year-over-year), such as home furnishing, small electronics, jewelry and hardware, which made up more than half (55%) of Costco’s e-commerce sales.
Costco has 853 stores, which includes 587 in the U.S., 107 in Canada, 40 in Mexico, 32 in Japan, 29 in the U.K.,18 in Korea, 14 in Taiwan, 14 in Australia, four in Spain, three in China, two in France and one each in Iceland, New Zealand and Sweden, according to the retailer.