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On a quarterly earnings call last week, Richard Galanti, Costco’s CFO, said the question of a membership fee hike was “a question of when, not if.”
Galanti noted that the company’s last price increase was in June 2017, a stretch he described as being “a little longer” than increases implemented by the big-box giant in previous years. The warehouse club typically raises its fees every five to six years.
“You’ll see it happen at some point. We can’t really tell you if it’s in our plans or not. We’ll let you know when we know,” he explained in the earnings call.
“In terms of looking at the values that we provided our members, we continue to increase those at certainly a greater amount than even more than if and when an increase occurs,” he continued. “Stay tuned. We’ll keep you posted.”
The speculation comes as Costco’s business remains healthy, with same-store sales (excluding changes in gasoline prices) in the U.S. climbing 3.1% in the fiscal fourth quarter that ended Sept. 3.
When asked by an analyst about the health of the Costco consumer, Galanti noted that “traffic continues to do very well,” up in the range of 4% and 5% on a year-over-year basis, while renewal rates remain “very strong,” at 92.7% in North America. The fourth quarter ended with 71 million paid household members, up 7.9% year over year.
Galanti added that while weakness continues to be seen in big-ticket items, Costco is faring better than competitors, according to NPD point-of-sale data. He added, “Not in every category, but overall, we tend to do better.”
In June 2017, Costco increased its basic membership cost from $55 to $60, and its executive membership from $110 to $120. When it comes to Costco’s warehouse club competitors, basic membership is $50 at Sam’s Club and $55 at BJ’s.
Among other membership-reliant businesses, Netflix lost about 800,000 subscribers in late 2011 after a bungled attempt to raise the price of the streaming service by about 60%, but it has since recovered.
Amazon faced backlash in 2014 when it raised the cost of Amazon Prime for the first time, but U.S. Prime members have since more than tripled. A Prime fee increase in February 2022 met minor pushback.
Nonetheless, some Costco customers expressed their annoyance on social media upon hearing of the likely membership fee hike.
"The bulk of their profits come through membership fees. And now the greedy overpaid CEO needs to gouge the customer again, even more," one member wrote on X, formerly known as Twitter.
"I am glad I listen to my kids, it’s starting to get way too costly. I won’t be renewing my membership, good luck Costco," another said.