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LEARN MOREPosted: 8:44 a.m. EDT Sep 27, 2023
Costco Chief Financial Officer Richard Galanti addressed questions Tuesday about whether now is the time for Costco to increase the cost of its membership.
"It's a question of when, not if," Galanti told investors.
In June 2017, Costco increased its basic membership cost from $55 to $60, and its executive membership from $110 to $120. Galanti noted that membership price increases generally occur more frequently than every six years.
"You know, it's a little longer this time around since June of '17. So, we're six years into it. But, you know, you'll see it happen at some point," he said.
Costco's fiscal year ended in early September. From September 2022 through August 2023, the company garnered $4.58 billion from membership fees, which is up from $4.22 billion the year before.
Seventy-one million households have memberships, Costco says. Of those, about 45% hold executive memberships. These members make up 73% of Costco's sales, Galanti said.
"We feel good, needless to say, about all the attributes of member loyalty and member growth," Galanti said. "And frankly, you know, 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."
This year, Costco began policing its self-checkout lanes to catch non-members shopping in the store.
Galanti said the implementation of self-checkout has led to some inventory shrink, but not to the same extent reported by other retailers.
"In the past several years, our inventory shrink has increased by a couple of basis points, in part, we believe, due to the rollout of self-checkout," Galanti said. "Over the past year, it has increased by less than 1 basis point more. So, no, thankfully, not a big issue for us."
According to the National Retail Federation, Costco is the nation's third-largest retailer, behind Walmart and Amazon.com.
