Just when it seems like the cost of everything is going up, Costco stands pat with its proverbial foot down.
America’s leading warehouse club hasn’t raised the price of its famously cheap hot dog combo ($1.50) or rotisserie chicken ($4.99) in ages. Now, it’s holding firm on membership fees, too.
During an earnings call on Thursday, Costco’s chief financial officer Richard Galanti, yet again, dismissed speculation about a long-expected hike in the cost of membership.
“Nice try,” Galanti told one Wall Street analyst who plainly suggested that raising fees would “make sense,” given the club’s record-high renewal rate of over 92 percent in the United States and Canada.
Galanti said the company is confident that raising the annual membership dues would not significantly affect new sign-ups or renewals—“if we wanted to do it,” he added.
“And at some point, we will [raise fees],” he said, “but our view right now is that we’ve got enough levers 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 [fees] for right now.”
Galanti added, “We’ll let you know as soon as we know.”
Costco executives have brushed aside questions about a possible fee increase for at least the past year. Their usual reply is to concede that a rate hike is inevitable but never commit to a specific timeline. “It’s a question of when, not if,” Galanti has repeatedly said.
Historically, the club raises its annual fees about every five or six years. (“They average around 5 years and seven months,” according to Galanti). The last increase came in June 2017. If the pattern were to continue, then the next hike is already past due.
One analyst predicted in March that higher fees would be announced this spring and implemented in the summer. Galanti’s comments yesterday effectively quashed that theory.
About one million new Costco members signed up for membership over the last three months, pushing the total count to over 69 million worldwide, the company reported. More than 31 million are executive members, who pay $120 annually for added perks including 2% in cash-back rewards. The basic gold-level membership costs $60 yearly.
Costco raked in over $1 billion in membership fees alone during the past quarter.
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Chris Shott
