Costco’s profits exceed expectations – and membership fees hold up

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Hint: it’s about saving money, or rather not spending more.

Key points

  • Inflation hurt retailers, including Costco.
  • Despite this, the warehouse club giant’s latest earnings report was positive.
  • In light of decent earnings, Costco will not be increasing its membership fees at this time.

Many of us who shop at Costco on a regular basis may be more likely to pay attention to things like current sales and seasonal offers than Costco’s performance as a business. After all, if you don’t own Costco stock, you might not care whether or not the company’s earnings are strong in any given quarter.

But here’s why you should care. The more money Costco makes, the less Costco has to charge things like membership fees. And in light of its latest revenue report, current members can breathe a sigh of relief that they won’t face a fee hike anytime soon.

Positive results in the fourth quarter

This week Costco released data on its fourth quarter earnings (Costco’s fiscal year for financial reporting purposes is different from the calendar year and as such ends in August). And while investors feared the numbers weren’t positive, they got a pleasant surprise.

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In its most recent quarter, Costco acquired many new members and reported higher-than-expected revenue. Considering the impact of inflation on retailer profit margins, this is a good thing for Costco.

But it’s also a good thing for Costco members, because now, in light of its recent strong quarter, Costco will not be raising membership fees. Instead, it will stick to its current prices – $60 for a basic subscription and $120 for an executive subscription.

Consumers need relief

Consumers have been feeling the impact of inflation since the summer of 2021. And many have had no choice but to dip into savings or rack up credit card debt 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.

Certainly, even if Costco were to impose higher membership fees, they wouldn’t necessarily break the bank. Members might consider something like an additional $5-10 per year. But still, in an age where every bill costs more, not having to pay $5 or $10 more helps.

That said, Costco members can’t rule out the possibility of a possible fee increase. The last time Costco’s fees increased was in June 2017. Given that it’s been over five years since then, a short-term fee hike wouldn’t be unheard of, especially since Costco typically increases its membership fees approximately every five years. .

But for now, the members are given a reprieve. And so if your Costco membership is up for renewal in the coming weeks, you can rest assured that you’ll get the same price you’re used to paying.

That doesn’t mean, however, that 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 large family to feed, you’ll likely find that Costco’s prices are still among the most competitive, even if they’re higher than a year ago.

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