{"id":14576,"date":"2023-05-27T08:21:03","date_gmt":"2023-05-27T12:21:03","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/grocery-prices-are-still-going-up-but-costco-membership-fees-arent-for-now\/"},"modified":"2023-05-27T08:21:06","modified_gmt":"2023-05-27T12:21:06","slug":"grocery-prices-are-still-going-up-but-costco-membership-fees-arent-for-now","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=14576","title":{"rendered":"Grocery prices are still going up, but Costco membership fees aren\u2019t \u2014 for now"},"content":{"rendered":"
\n
<\/p>\n
\n

\n \u201c<\/span> \u2018We feel that it\u2019s incumbent upon us to be that beacon of light to our members in terms of holding them for right now.\u2019\u201d<\/span>\n <\/p>\n


\n \u2014 Richard Galanti, chief financial officer, Costco<\/span>
\n <\/small><\/p><\/div>\n<\/p><\/div>\n

As inflation has shoppers on what is now a multiyear bargain hunt, membership discount retailer Costco Wholesale Corp. on Thursday appeared to offer some pushback, with qualifiers, to the idea of hiking its membership fees in the near term. <\/p>\n

During the company\u2019s earnings call on Thursday, UBS analyst Michael Lasser asked Costco executives: \u201cGiven the amount of value you give to your members, wouldn\u2019t it make sense to raise your fees right now \u2026 because your renewal rates have been so high and you would be providing even more value in this difficult economic environment?\u201d<\/p>\n

\n

In response, Costco
\n COST,
\n +4.26%<\/bg-quote>
\n Chief Financial Officer Richard Galanti said: \u201cAs it relates to membership fees, nice try, Michael.\u201d<\/p>\n

Still, Galanti said he felt the company could raise those fees \u2014 if it wanted to \u2014 without hurting demand. But he suggested the company was OK with holding off for now and letting other profit and sales drivers do the work. <\/p>\n

\u201cBut at the end of the day, with the headline being inflation, we feel very good about if we want to do it can we do it without impacting in any meaningful way renewal rates or signups or anything, and at some point we will,\u201d he said. \u201cBut our view right now is that we\u2019ve got enough levers out there to drive business.\u201d<\/p>\n

He continued: \u201cWe feel that it\u2019s incumbent upon us to be that beacon of light to our members in terms of holding them for right now.\u201d <\/p>\n

Earlier in that exchange, Galanti said he was hoping for a cooldown on prices, adding, \u201cYou\u2019ll\u00a0be\u00a0the\u00a0first to\u00a0see\u00a0it\u00a0at\u00a0Costco\u00a0in\u00a0my\u00a0view.\u201d <\/p>\n

The exchange occurred after Costco reported third-quarter earnings per share and revenue that missed expectations, with U.S. same-store sales slipping 0.1%. The company made $1.04 billion in membership fees during the quarter, slightly higher than the $984 million it booked in the same quarter last year. <\/p>\n

Shares of Costco were up 4.9% on Friday. <\/p>\n

Food and gas prices surged last year following Russia\u2019s invasion of Ukraine, which disrupted a large segment of the world\u2019s agricultural production. But as commodity prices show signs of easing, some economists suspect that companies have taken advantage of the past three years of supply shocks to keep prices and profits elevated. <\/p>\n

Last week, Walmart Inc.\u2019s
\n WMT,
\n +0.18%<\/bg-quote>
\n chief executive, Doug McMillon, also said that higher grocery prices \u2014 which have risen as companies try to cover their own costs to bring product to shelves and as they gauge consumers\u2019 willingness to pay more \u2014 risked hurting demand elsewhere in the store.<\/p>\n

\u201cThe persistently high rates of inflation in these categories lasting for such a long period of time are weighing on some of the families we serve,\u201d McMillon said on Walmart\u2019s earnings call. <\/p>\n

\u201cThis stubborn inflation in dry grocery and consumables is one of the key factors creating uncertainty for us in the back half of the year because of the cumulative impact on discretionary spending in other categories, specifically, general merchandise,\u201d he said. <\/p>\n

McMillon added that higher prices had stuck for dry groceries and consumables like paper products. He added: \u201cWe all need those\u00a0prices\u00a0to come down.\u201d<\/p>\n

Shares of Costco are up 9.4% over the past 12 months. By comparison, the S&P 500
\n SPX,
\n +1.30%<\/bg-quote>
\n is up 3.8% over that period. <\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

\u201c \u2018We feel that it\u2019s incumbent upon us to be that beacon of light to our members in terms of holding them for right now.\u2019\u201d \u2014 Richard Galanti, chief financial officer, Costco As inflation has shoppers on what is now a multiyear bargain hunt, membership discount retailer Costco Wholesale Corp. on Thursday appeared to offer […]<\/p>\n","protected":false},"author":1,"featured_media":14577,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"video","meta":{"footnotes":""},"categories":[239],"tags":[83],"class_list":["post-14576","post","type-post","status-publish","format-video","has-post-thumbnail","hentry","category-investing","tag-featured","post_format-post-format-video"],"yoast_head":"\nGrocery prices are still going up, but Costco membership fees aren\u2019t \u2014 for now | iFintechWorld<\/title>\n<meta name=\"description\" content=\"\u201c \u2018We feel that it\u2019s incumbent upon us to be that beacon of light to our 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