Costco Holds Out on Raising Membership Fees

Although in the past, Costco (NASDAQ-COST) has raised its membership fees every five and a half years, they are choosing to forgo the price hike as membership renewal rates reach an all-time high.

Costco’s membership renewal rate rose .3% since last quarter, coming in at 92.6% at the end of the fourth quarter. 

Costco’s Chief Financial Officer, Richard Galanti, explained the decision not to raise fees during the company’s earnings call. “In terms of membership fees and a possible increase, there are no specific plans regarding a fee increase at this time.  We’re pleased with our growth in both top line sales and membership households over the last several quarters and in member loyalty as reflected in increasing member renewal rates.”

Galanti added, “Given the headline of inflation and concerns about recession, we feel quite comfortable driving sales and earnings the way we are right now, and we still have that arrow in our quiver as we go forward.”

Galanti did acknowledge the effect inflation has had on Costco prices but gave customers hope by noting “We’re seeing some commodities prices coming down, such as gas, steel, beef, relative to a year ago, even some small cost changes in plastics. We’re seeing some relief on container pricing.”

Galanti said himself, “it’s a question of when not if” regarding the rise in membership fees, so enjoy it while you can.