Business

Costco isn’t raising membership fees after earnings beat expectations

Shoppers wait in line at the checkout counter at a Costco wholesaler in Orlando, Florida.

Paul Hennessy | Sopa images | Light rocket | Getty Images

Costco is still waiting to increase its membership fees after reporting fourth-quarter fiscal results that exceeded expectations.

The retailer typically raises rates every five years, but has not said when it will do so again after rival Sam’s Club raised its rates in late August. Richard Galanti, the company’s chief financial officer, noted on Thursday that Costco has not reached its typical upside milestone.

“If you look at June ’17, plus five years and seven months, you’re talking about January ’23,” Galanti said during an earnings call with investors. “Now I’m not suggesting it’s January 23. I’m just saying it’s not there yet.”

A Costco membership costs $60 per year, or $120 per year for an executive membership with added benefits.

During the quarter ended Aug. 28, Costco said membership has grown and executive members now represent a record 44% of total membership.

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For the quarter, Costco reported higher revenue of $72.09 billion, slightly above the $72.04 analysts had expected. Earnings per share rose to $4.20 from a year ago, beating estimates of $4.17.

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Gross margins declined in the quarter as inflation pushed up costs.

Shares of Costco fell 2% in Friday morning trading.

Costco has kept its prices competitive, even maintaining the price of its $1.50 hot dog combo meal as inflation puts pressure on shoppers. Galanti noted a small increase for the company’s Kirkland-branded products, but said the company sees a relatively strong consumer.

“They don’t trade down. They trade up or certainly the same,” Galanti said in the earnings call.

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