- Costco says it hasn’t seen a meaningful drop in sign-ups or renewals after the member fee increase was announced.
- CFO Gary Millerchip attributed the tolerance of the hike to the company’s inflation-busting efforts.
- “We’ve stayed true to our principles of really trying to help the member and deliver the value,” he said.
Costco says members have largely shrugged off the latest fee increase.
The company has seen “no real change in trend” for sign-ups or renewals in the months following the announcement of the hike, CFO Gary Millerchip said during Costco’s fourth quarter earnings call Thursday.
Millerchip also noted that Costco delayed the fee increase by about two years compared with its typical average cycle, due to the impacts on consumers from the pandemic and inflation.
For the fourth quarter, which ended before the higher fee actually took effect, Costco reported a renewal rate of 92.9% in the US and Canada.
“We’ve been able to stave off inflation on things, like the hot dog pricing at $1.50 and the rotisserie chicken at $4.99, and generally demonstrating the way that we’re lowering prices for members wherever we can,” he said.
“There’s been a recognition that in the context of what’s happened more broadly over the last seven years, that we’ve stayed true to our principles of really trying to help the member and deliver the value,” he added.
Millerchip also said that pairing the news with a wage increase for workers demonstrated Costco’s commitment to investing in the key drivers of the business.
For the full fiscal year, membership fees totaled $4.8 billion, representing half the total operating income for the period, and the company expects the benefit from the fee increase to begin showing up in the next six to 12 months.
“We’ve been making investments — whether it be in wages for our employees or in lowering costs — to show our members that we want to make sure that the increase is delivering value to them,” he said.
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