Costco Wholesale Corp. has revealed that it does not plan to raise its membership prices over the near term, despite grocery prices rising at large. The topic was initially brought up during the company’s earnings call on Thursday when a reporter raised the question to Chief Financial Officer Richard Galanti.
Galanti responded by explaining that while the membership-based discount retailer could raise its membership fees, it wouldn’t make sense to do so now as the retailer seeks to continue providing consumers with value. While Galanti retains the belief that Costco could raise fees without hampering demand, it is preferable to allow the company’s other “profit and sales drivers” to do the bulk of Costco’s income generation.
Questions surrounding Costco’s membership fees come after the discount retailer reported third-quarter earnings per share that missed Wall Street estimates. The company’s same-store sales for the period edged 0.1% lower.
While Galanti maintains that Costco’s decision to maintain its membership fees is not due to fears of crippling demand, Walmart’s chief executive Doug McMillon insists that higher grocery prices have had an undoubted impact on consumer demand. “The 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,” McMillon stated during his company’s latest earnings call.