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Costco membership price hike ‘a question of when, not if’: CFO

Costco executives signaled that the warehouse club plans to raise the price of its yearly memberships — and that the only remaining question is about the timing.

On a call with investors following its fiscal fourth-quarter results on Tuesday — where revenue came in at $77.43 billion, just short of Wall Street’s forecasts of $77.72 billion — Costco’s Chief Financial Officer Richard Galanti said it’s a “question of when, not if” when asked about the prospect of hiking the membership price.

“We’ll let you know when we know,” Galanti added. “So, you know, stay tuned. We’ll keep you posted.”

Costco’s basic membership, known as Gold Star, has been $60 per year since 2017 — when it raised the price by $5 for the first time since 2011.

Its Executive Membership runs customers $120 per year, plus gives members additional discounts and a 2% return on qualifying purchases.

Should Costco raise its membership fees, it would impact the nearly 130 million Americans who shop at the retailer’s 591 locations.

Costco CFO Richard Galanti said that the warehouse club wouldn't be raising its membership prices -- yet. ""We'll let you know when we know," he said on an earnings call with investors on Tuesday.

Galanti attributed the soft sales to a decrease in spending on discretionary and big-ticket items as consumers feel the squeeze of high inflation.

The average transaction at Costco was down 4.5% among US shoppers, “impacted in large part from weakness in bigger ticket nonfood discretionary items, as well as the gas price deflation,” Galanti said.

According to the American Automobile Association, the average price for a gallon of unleaded gas currently sits at $3.83 — a decrease from June 2022’s peak, when the average coast was $5.01.

However, sales were saved by Costco members’ “relatively strong” spending in the grocery category.

Galanti noted during the company’s latest earnings call that membership was up in the fourth quarter.

The number of cardholders was up 7.6% from last year’s period, to 127.9 million, while household members — where people who live at the same address as the primary accountholder is gifted a free membership card — was up 7.9% from last year’s period, to 71 million paid households.

Galanti said that shoppers are spending less on big-ticket items. To adapt to customers' new habits, Costco has added 50 small-ticket items.

Despite the increase in shoppers, same-store sales, including gas and foreign exchange, rose just 1.1% in the fourth quarter, missing expectations of 1.87%. Excluding gas and foreign exchange, sales were up 3.8%, below the 3.92% Wall Street anticipated.

Galanti said the retailer added as many as 50 so-called “smaller ticket indulgent items” like snacks that he said increased the number of items shoppers are putting in their baskets.

Investors seemingly took cues from Costco’s losses in the quarter, and shares fell over 1%, to $552.96, in premarket trading on Wednesday.