Costco responds to membership fee hike issue

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According to Sam’s Club’s recent decision, yes raise the membership feebuyers anxiously wondered whether Costco had any plans to do the same. And finally, the question was answered during the leading warehouse club’s earnings call yesterday.

Inflation has been a major challenge for most retailers this year, but wholesale warehouse clubs have actually benefited from shoppers seeking refuge from rising prices. Warehouse retailers like Costco offer members discounted prices on bulk products in exchange for an annual membership fee.

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Good deal, right? Certainly, but only if the membership fees are still affordable. Fortunately, Costco’s Chief Financial Officer Richard Galanti has assured shoppers and shareholders alike that yes the company has no concrete plans for now to raise the annual membership fee.

However, Galanti added a caveat — a price increase is likely to happen at some point in the future. “We still have that arrow in our quiver going forward,” he said.

Currently, a basic annual membership at Costco costs $60, while a “Gold-Tier” membership is double the price ($120). Earlier this month, Walmart-owned Sam’s Club announced that annual membership fees will increase from $45 to $50 for entry-level memberships and to $110 from $100 for “Plus-Level” memberships.

However, it appears that Costco is still sticking with its current prices. The retailer’s total revenue rose 15% to about $72.10 billion in the fourth quarter, beating most analysts’ forecasts. These numbers are in stark contrast to those of Target Corporation recent reportwhich details the decline in quarterly earnings, no doubt driven by inflation-conscious shoppers who want to save more and spend less.

But it wasn’t good news for Costco. The company’s total inventory at the end of the fourth quarter was up 26% year-over-year. “The early season sales seem to be going well,” Galanti commented during the call. “[I] we would expect the 26% year-on-year increase to begin to moderate somewhat, as it has over the past few weeks.”

Also, Costco’s earnings call apparently wasn’t positive enough for Wall Street. Shares were down about 2.6% in after-hours trading on Thursday.

John Anderer

John Anderer is a science, health and lifestyle writer. Read more about John

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