Costco says the time to raise membership prices is 'about now,' but it won't just yet: 'We'll let you know'
- For now, Costco is not raising the fee for members of its warehouse club, CFO Richard Galanti said Thursday.
- The company last increased its fee in 2017 from $55 to $60 for a basic one-year membership.
At a time when everything seems to be getting more expensive, Costco's membership will stay the same — for now, at least.
The Issaquah, Washington, mega-retailer told investors Thursday that, for the time being, it would not raise the annual fee for its Gold Star membership from $60.
When asked about a fee hike, Chief Financial Officer Richard Galanti acknowledged that the pattern of prior hikes would lead to one "about now," but said no increases were imminent.
"It's a question of when, not if," he said. "We'll let you know."
The decision echoes CEO Craig Jelinek's words at January's annual meeting: "Right now is not the time to do it," he said. "That's not to say that at some point we won't, but at the moment, we have no plans to take up the fee."
Analysts have been anticipating a hike, noting that the last time the company raised its price was 2017.
Prior $5 increases have also followed a pattern that Chief Financial Officer Richard Galanti highlighted in December: "over the last 16 or so years, they averaged five years and seven months, and I know now that five years and seven months from June of 2017 is January of 2023."
Costco's $60 price is slightly higher than the other two leading warehouse clubs, Sam's Club and BJ's, who charge $50 and $55, respectively.
Still, the retailer has had no trouble getting people to sign up, reporting more than 1 million new memberships in the prior quarter, bringing the total to over 68 million. It also boasts a 93% renewal rate in the US and Canada, and the fees brought in more than $4.2 billion last year. Costco also placed highest among general merchandise retailers in the most recent American Customer Satisfaction Index rankings.
Over 30 million households have Costco's $120 Executive Membership, and Galanti said Executive members represent nearly three-quarters of the company's total sales.
High gas prices last year led to a flurry of sign-ups, and Galanti said there's not a pressing need to increase the fee. He pointed to Costco's popular $4.99 rotisserie chicken as one way the company aims to reward members and drive sales.
"There's no analytical framework we use other than we feel very good about our member loyalty and our strength," Galanti said in December. "If we wanted to do it yesterday, we could. If we want to do it six months from now, we can. So we'll wait and see."