Costco's CFO, Richard Galanti, revealed that there would be no immediate increase in members' prices despite the company's successful quarter.
For over a year, rumors have been circulating that Costco might raise its membership fees. After a financial meeting last September, the company hinted at this again, stating that a fee increase was inevitable. Galanti often repeats this, saying that raising membership fees is a matter of timing.
COSTCO Reveals New Membership Prices: "Not Needed Just Yet"
Even though Costco has been hinting at raising membership fees, CFO Richard Galanti explained after their recent financial update on December 14 that they "haven't needed to do it" so far.
2023 has been an excellent year for Costco, particularly this quarter. The company saw growth in both sales and profits. They also experienced a 2.6% rise in sales at their existing U.S. stores.
Additionally, Galanti pointed out that more people are renewing their memberships, and new members are signing up, showing that Costco's memberships are doing well.
In the last three months, Costco reported having 72 million households with paid memberships. This data is an impressive 7.6% more than last year. The company's income from membership fees also rose by 8.2%, reaching an impressive $1.082 billion.
These solid financial results led CFO Richard Galanti to say, "We feel pretty good about what we're doing right now."
However, Galanti has cautioned that customers shouldn't expect membership fees to stay the same forever. He mentioned that Costco is focused on offering great value. They have delayed increasing fees for longer than usual because they believe they have added more value to their memberships. How long will Costco hold off on raising their fees remains to be seen.
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Costco Fee Increase: Pending or Postponed?
The last time Costco raised its membership fees was in June 2017. According to their usual pattern of changing prices every five and a half years, another increase might be coming soon.
The 2017 increase affected the basic Gold Star Membership and the higher-level Executive Membership. Each of these memberships saw a $5 price rise. Even though this amount seems small, another increase within ten years would be surprising.
During a financial meeting in late September, Galanti was asked about increasing Costco's membership fees. His reply was vague: "We can't say if we're planning that. We'll inform you when we decide. We're happy with our members' loyalty and growth, so stay tuned for updates. But right now, there's not much I can say."
This response doesn't commit to any specific plan and suggests that Costco might not raise its fees until the end of 2023. Galanti would probably have given more details if a fee increase were likely soon.
It's important to remember that these financial meetings are mainly for investors, not customers. Investors often like fee increases because they can boost the company's income and potentially raise the stock price.
So, when Galanti says there are no current plans to raise fees, he's not just trying to reassure customers. Most likely, he's just being open about the company's current situation, as investors attend these meetings more often than regular Costco shoppers.
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