Shares of Costco Wholesale Corporation (NASDAQ:COST) dropped 1.90% in previous session as the firm going to increase its membership fees. Costco typically increases the cost of membership every five and a half years. The chain previously raised the cost of membership in June 2017, which puts it approximately in the vicinity of when it would notify customers of an impending price rise.
The current costs of a Costco Gold Star membership is $60, while the cost of an Executive Membership, which provides 2% back on most purchases (up to $1,000 yearly), is $120.
During the warehouse club’s third-quarter results call, Costco Senior Vice President of Finance Bob Nelson, sitting in for CFO Richard Galanti who was on vacation, discussed a potential pricing rise.
He added, there will be further talks with Craig, Ron, and the executive team as we approach this five-and-a-half-year point. But, for the time being, we don’t have anything more concrete to share in terms of timeframe. Furthermore, given the present macro environment, historically high inflation, and the strain it is putting on their members and on consumers in general, they believe that increasing their membership price, ahead of their usual timeframe, is not the proper moment.
Costco, like its competitor, has been mindful of appearing to add to its consumers’ financial difficulties during an already difficult time. Sam’s Club raising its pricing provides some cover for the chain’s own hike, and adding a comparable “cash back” incentive that makes the initial rise not actually an increase at all is a move the firm may emulate.
However, it makes more sense for Costco, which still costs more than Sam’s Club for both membership categories, to announce a price rise that would take effect after the holiday season. This would put the firm on a more even playing field with its competitor in the fourth quarter, while also offering potential new members an incentive to lock in existing prices for the following year.
Costco Wholesale Corporation (NASDAQ:COST) releases net sales of $17.55B for the retail month of August, the four weeks ending August 28, 2022, 11.4% increase from $15.75 billion the previous year. The Company announced net revenues of $70.8 billion for the 16-week fourth quarter ended August 28, 2022, a 15.3 percent rise from $61.4 billion during the same period previous year. The Company announced net revenues of $222.7 billion for the 52-week fiscal year ending August 28, 2022, a 15.9 percent rise from $192.1 billion during the same period previous year.
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