Dominick Reuter/Insider
- Costco still won't raise its annual membership fees, CFO Richard Galanti said Tuesday.
- The last time the company increased its fee was 2017, with prior hikes every five to six years.
- Costco collected nearly $4.6 billion in fees for the past year, representing 72% of profits.
It's still not happening.
Costco will not raise its annual membership fees, CFO Richard Galanti told analysts on the company's quarterly earnings call Tuesday.
"You'll see it happen at some point," Galanti said. "We'll let you know when we know."
The last time Costco raised fees was 2017, and Galanti noted that an increase is arguably past due, based on the typical five- to six-year interval of prior hikes. Even so, now is not the time, he said.
"Stay tuned — we'll keep you posted," Galanti added.
Because Costco sells merchandise at extremely low mark-ups, membership fees are a key way the company is able to turn a profit.
Costco reported nearly $4.6 billion in revenue from membership fees last year, representing over 72% of the total annual profits of $6.3 billion. The company posted net sales of $237.7 billion, aside from fees.
In June, the warehouse club acknowledged a Netflix-style crackdown on shoppers improperly sharing membership cards, and reported $1.5 billion in fee revenue during the subsequent 17-week period – compared to $1.3 billion in roughly the same period a year earlier.
Costco's $60 basic Gold Star membership is slightly more expensive than competitors BJ's Wholesale and Sam's Club, who charge $55 and $50, respectively.
Galanti also said Costco is able to increase fee revenue without raising the price by convincing more members to upgrade to the $120 Executive account, which he said has the additional advantage of increasing sales as Executive shoppers tend to spend more.