Here's What Costco Just Said About Membership Fee Increases
After Sam's Club's recent decision to raise membership fees, shoppers have been anxiously wondering if 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 in pursuit of refuge from rising prices. Warehouse retailers like Costco offer members discounted prices on bulk items in exchange for an annual membership fee.
Good deal, right? Absolutely, but only if the membership fees remain affordable. Luckily, Costco's Chief Financial Officer Richard Galanti assured shoppers and shareholders alike that the company has no concrete plans at this time to raise annual membership fees.
Galanti did add, however, a caveat—a price increase will likely happen at some point in the future. "We still have that arrow in our quiver as we go forth," he said.
Right now, a basic annual membership at Costco costs $60, while a "Gold-Tier" membership is double that price ($120). Earlier this month, Walmart-owned Sam's Club announced annual membership fees would be increasing from $45 to $50 for an entry-level membership and to $110 from $100 for a "Plus-Level" membership.
But Costco still seems to be holding steady with its current pricing. Surpassing most analysts' predictions, the retailer's total revenue increased 15% in the fourth quarter, reaching roughly $72.10 billion. Those numbers are a stark contrast to the Target Corporation's recent report, detailing a decline in quarterly profits, no doubt brought on by inflation-minded shoppers looking to save more and spend less.
It wasn't all good news for Costco, though. The company's overall inventory at the end of the fourth quarter was 26% higher year over year. "Initial seasonal sales seem to be going well," Galanti commented during the call. "[I] would expect the 26% year-over-year increase to start to head down as it has in just the past few weeks a little bit."
Additionally, Costco's earnings call apparently wasn't positive enough for Wall Street. Shares dropped by roughly 2.6% in after-hours trading on Thursday.