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Costco not raising membership fees after profits beat expectations

Shoppers wait in a line at a Costco wholesale store in Orlando, Florida.

Paul Hennessey | Sopa Pictures | Light flare | Getty Images

Costco is still waiting to raise its membership fees after announcing fiscal fourth-quarter results that beat expectations.

The retailer typically increases its fees about every five years, but did not say when it will do so again after rival Sam’s Club raised its fees in late August. On Thursday, Richard Galanti, the company’s chief financial officer, noted that Costco hadn’t hit its typical milestone for a hike.

“If you look at June 2017, plus five years and seven months, you’re talking roughly January 23,” Galanti said on a conference call with investors. “Now I’m not saying it’s January 23. I’m just saying it’s not there yet.”

A Costco membership costs $60 per year, or $120 per year for an executive membership that includes additional benefits.

In the quarter ended Aug. 28, Costco said its membership grew and executive members now made up a record 44% of total membership.

For the quarter, Costco reported higher revenue of $72.09 billion, which was slightly higher than the $72.04 expected by analysts. Earnings per share increased from a year ago to $4.20, beating estimates of $4.17.

Gross margins declined during the quarter as inflation drove up costs.

Costco shares were down 2% in Friday morning trading.

Costco has kept prices competitive and even kept the price of its hot dog combo meal at $1.50 as inflation pressures shoppers. Galanti noted a slight increase in the company’s private label Kirkland products, but said the company is seeing a relatively strong consumer.

“They’re not falling. They’re certainly rising or trading the same,” Galanti said on the earnings call.


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