Costco will be increasing membership fees as early as next year, CFO Richard Galanti confirmed during an earnings call last week. Galanti hinted at the increases earlier this year in an earnings call, when he responded to a UBS analyst who asked about the possibility of a membership hike this year, and noted the move might come “especially in light of companies like Amazon and Netflix raising their fees.”
That said, Galanti suggested that Costco “look[s] less at what others do,” and more about the intervals between Costco’s previous increases.
The hike may come as early as January 2023, but he said the company was in no rush.
“We feel that we’re in a very strong competitive position right now,” he said, adding “If we have to wait a few months or several months, that’s fine,” Galanti said, adding that he believes in the loyalty of Costco members – who have remained members throughout previous increases in fees regardless of inflation.
Right now Costco’s executive memberships cost $120 per year, for which members earn a 2% reward on some purchases. These constitute around 45% of of memberships, but represent around 73% of worldwide sales according to Galanti. Business and Gold Star members pay $60 per year.
Costco earned around $1 billion in membership fees between July and the end of September.
The company has 847 warehouses worldwide – including 583 in the US and Puerto Rico. Outside the US, Costco has a presence in Canada, Mexico, Japan, the UK, South Korea, Taiwan, Australia, Spain, France, China, Iceland, New Zealand, and Sweden. The company opened 24 locations this year, and hopes to increase that to 30 per year over the next 5-10 years.
“Certainly, we have a lot of activity going on,” he said, adding that the company has tried to keep prices as low as possible as inflation spiked during the year.
“As commodity costs are mostly coming down, whether it’s corn flour, sugar, and butter or even some things like steel, a few things are up. But overall, we’re seeing a little bit of a trend,” he told investors.
In October, competitor Sam’s Club raised its membership fees for the first time in a decade, from $45 to $50 per year for Club members, and from $100 to $110 per year for Plus members.
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