Costco earnings beat expectations – membership fees stay flat
Hint: it’s all about saving money — or rather, not spending more.
the main points
- Inflation was hurting retailers, including Costco.
- Despite this, the warehouse giant’s latest earnings report was positive.
- In light of the decent earnings, Costco won’t raise membership fees at this time.
Many of us who shop at Costco regularly may be inclined to care more about things like current sales and seasonal offers than how well Costco is doing as a company. After all, if you don’t own shares of Costco stock, you may not care whether or not the company’s earnings have been solid during a particular quarter.
But that’s why you do it should Care. The more money Costco makes, the less money Costco has to charge for things like membership fees. And in light of the latest earnings report, existing members can breathe a sigh of relief as they won’t be in for a fee hike anytime soon.
Positive results for the fourth quarter
This week Costco released data on its fourth-quarter earnings (Costco’s fiscal year for financial reporting purposes differs from a calendar year, and as such, ends in August). And while investors were worried that the numbers wouldn’t be positive, they were pleasantly surprised.
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During the last quarter, Costco acquired a lot of new members and generated higher than expected revenue. Given the way inflation has affected retailers’ profit margins, that’s a good thing for Costco.
But it’s also a good thing for Costco IndividualsBecause now, given its recent strong quarter, Costco won’t raise membership fees. Instead, they’ll stick to their current rates – $60 for a basic membership and $120 for an executive membership.
Consumers need convenience
Consumers have been feeling the impact of inflation since the summer of 2021. Many had no choice but to dip into their savings or pile into debt on their credit cards 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 tag.
True, even if Costco charges higher membership fees, they won’t necessarily break the bank. Members may be looking for something along the lines of an extra $5 to $10 a year. But still, while each bill costs more, you don’t have to pay an extra $5 or an extra $10.
However, Costco members cannot write off the possibility of a in the end Fee increase. The last time Costco’s fees went up was in June of 2017. Since it’s been more than five years since then, there won’t be a rise in fees in the near term—especially since Costco usually raises membership costs every five years or so.
But for now, members are getting a reprieve. Thus, if your Costco membership is ready to renew in the coming weeks, you can rest assured that you’ll get the same price you used to pay.
However, that doesn’t mean you won’t pay more for some of the items you buy at Costco. Like other retailers, Costco 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 prices are still among the most competitive—even if they’re higher than they were a year ago.