Costco plans to increase membership fees, possibly as early as next year, following the lead of its competitor Sam’s Club.
Since March, the company’s CFO Richard Galanti has mentioned the possibility of a fee increase to membership subscriptions in monthly earnings calls. In the latest call with investors Dec. 8, he said it was “a question of when, not if.”
“We feel that we’re in a very strong competitive position right now,” Galanti said. “And if we have to wait a few months or several months, that’s fine.”
Galanti said he plans to be coy on when the fees will be raised.
Costco’s executive members pay $120 each year and earn a 2-percent reward on some purchases. They make up about 45 percent of membership but represent 73 percent of worldwide sales, Galanti said.
Business and Gold Star members pay $60 a year.
The company earned $1 billion in membership fees from July to the end of September.
Costco has 847 warehouse stores worldwide, with 583 in the U.S. and Puerto Rico. Other locations are Canada, Mexico, Japan, the UK, South Korea, Taiwan, Australia, Spain, France, China, Iceland, New Zealand, and Sweden.
The company opened 24 new locations this year and hopes to increase that to 30 a year in 5 to 10 years, Galanti said.
“Certainly, we have a lot of activity going on,” he added.
The company has tried to keep prices low as inflation spiked this year and plans to push for lowering prices as inflation cools, he said.
“As commodity costs are mostly coming down, whether it’s corn flour, sugar, and butter or even some things like steel, a few things are up. But overall, we’re seeing a little bit of a trend,” Galanti told investors.
Sam’s Club raised its membership fees in October for the first time in a decade. Fees rose from $45 to $50 a year for Club members and $100 to $110 a year for Plus members. Plus membership hadn’t increased since it was introduced in 1999.
