Costco is certain to raise its membership fees in the future, but as the sixth anniversary of the last fee hike approaches, the company says there are no immediate plans to do so while membership rates are at all-time highs.
“In our view, it’s a question of when, not if,” Costco CFO Richard Galanti told investors on a Q2 earnings call on Thursday.
Galanti acknowledged that June would mark six years since the Washington-based retail giant last raised the price of its Gold Star membership, which currently costs $60. He said that Costco typically raises its membership fee every five years and seven months, on average. Costco last increased its membership prices in June 2017.
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As to whether fees will go up soon, Galanti said, “we’ll let you know.”
At the end of the second quarter, Costco’s membership renewal rate came in at 92.6% in the U.S. and Canada, and 90.5% worldwide, each up 0.01% from the previous quarter.
“Membership growth has remained strong,” Galanti reported. “We ended the second quarter with 68.1 million paid household members and 123.0 million cardholders, both up more than 7% versus a year earlier.”
Galanti said that at the end of Q2, Costco had 30.6 million paid executive memberships. Executive members now represent 45% of paid members and about 73% of worldwide sales.
The company posted $1.027 billion in membership fee income compared to $967 million a year earlier, a $60 million increase, or 6.2%.
Coscto also reported a Q2 net sales increase of 6.5%, to $54.24 billion, from $50.94 billion last year.
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The company earned $1.486 billion in net income, an increase over the $1.299 billion for Q2 2022.
Addressing inflation, Galanti actually expressed optimism that prices are cooling off. He said inflation grew somewhere between 5%-6% this quarter, compared to 6%-7% in the previous quarter.
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“We continue to see some improvements in many items,” Galanti told investors. “Commodity prices are starting to fall — not to back to pre-COVID levels … but continue to provide some relief — things like chicken, bacon, butter, steel, resin, nuts.”