A top Costco Wholesale executive confirmed that the big retailer has no plans to change the price of its $1.50 hot dog and soda combo in its stores despite months of decades-long high inflation.
Costco Chief Financial Officer Richard Galanti reiterated that the low price point on the fan-favorite deal would remain during the company’s fourth-quarter earnings call on Thursday.
An analyst asked if Costco was adjusting prices in other parts of its business to maintain sales margins for its hot dog and soda offerings and other value offerings.
“I just got struck by lightning,” Galanti joked when the combo was mentioned. She added that higher-margin businesses, such as gasoline and travel sales, help Costco maintain its value offerings.
“Those things help us to be more aggressive in other areas or, as you mentioned, keep the price of the hot dog and soda down a little bit longer, forever,” Galanti added.
Costco and other retailers have raised prices over the past year, passing on higher costs for raw materials and goods to consumers. Inflation has eased slightly in recent months, but was still hovering at a higher-than-expected 8.3% in August.
Galanti estimated that price inflation at Costco was around 8% during the fourth quarter, with increases “a little higher on the food and sundries side.”
Costco has no immediate plans to increase its membership fees, according to the executive. Annual membership dues at the retailer currently start at $60.
Still, Galanti noted that membership pricing is likely to increase at some point in the future. Costco has generally increased its rates about every five or six years.
“Our view is that we are confident in our ability to do it and, at some point, we will. But it’s a question of when, not if,” Galanti said.
Despite the inflationary environment, Costco beat analysts’ expectations in the fourth quarter. The retailer posted quarterly revenue of $72.09 billion and earnings per share.
But the shares still fell more than 4% in Friday trading after executives noted a decline in gross margins.
It’s well known that Costco executives have avoided raising prices at their food courts, especially for hot dog and soda combos, regardless of changes in the economy.
In July, Costco CEO Craig Jelinek gave a one-word response when asked on CNBC if price changes were being considered for the deal.
“Did not say.