Hint: it has to do with saving money, or rather, not spending more.
- Inflation has been hurting retailers, including Costco.
- Despite that, the warehouse club giant’s most recent earnings report was positive.
- In light of decent earnings, Costco won’t be raising its membership fees at this time.
Many of us who shop at Costco on a regular basis may be more inclined to pay attention to things like current sales and seasonal deals than how well Costco is doing as a company. After all, if you don’t own Costco stock, you may not care whether the company’s earnings are strong during a given quarter or not.
But here’s why you should watch out. The more money Costco makes, the less money Costco has to charge for things like membership fees. And in light of their most recent earnings report, current members can breathe a sigh of relief that they won’t be seeing a fee increase any time soon.
Positive fourth quarter results
This week, Costco released data on its fourth quarter earnings (Costco’s fiscal year for financial reporting purposes is different from the calendar year and as such ends in August). And although investors were worried that the figures were not positive, they were pleasantly surprised.
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During its latest quarter, Costco acquired many new members and reported higher than expected revenue. Given the way inflation has been hurting retailers’ profit margins, that’s a good thing for Costco.
But it’s also a good thing for Costco. membersBecause now, in light of its recent strong quarter, Costco won’t be raising membership fees. Instead, it will keep its current prices: $60 for a basic membership and $120 for an executive membership.
Consumers need relief
Consumers have been feeling the pinch of inflation since the summer of 2021. And many have had no choice but to dip into their savings or rack up credit card debt just to stay afloat. The fact that Costco isn’t raising membership fees is a good thing, because right now, the last thing shoppers need is a higher price.
Of course, even if Costco imposed higher membership fees, they wouldn’t necessarily break the bank. Members might be looking for something along the lines of an extra $5 to $10 per year. But still, at a time when every bill costs more, not having to pay an extra $5 or $10 helps.
That said, Costco members can’t rule out the possibility of a eventual rate hike. The last time Costco’s fees increased was in June 2017. Given that it’s been more than five years since then, a short-term fee increase wouldn’t be unheard of, especially since Costco typically raises membership costs every five more years. or less. .
But for now, the members are receiving a reprieve. So if your Costco membership is up for renewal in the next few weeks, you can rest assured that you’ll be getting the same price you used to pay.
However, that doesn’t mean you won’t end up paying more for some of the items you buy at Costco. Like other retailers, Costco has had to raise prices to account for its higher costs. But if you have a larger family to feed, you’ll likely find that Costco’s prices are still among the most competitive, even if they’re higher than they were a year ago.