Warehouse club giant Costco (COST) has given its strongest signal yet that it's nearing a fee increase on its 63 million plus members.
"So, I think the question will continue to be asked to until we do or don't do something [on a fee increase]. But at the end of the day, we certainly feel very good about our member loyalty," Costco's long-time CFO Richard Galanti said on an earnings call Thursday night. "And so, you guys all know when and we'll tell you — and at some point it will happen, but stay tuned."
Costco's last membership fee increase kicked in on June 1, 2017. It took its Gold Star membership fee up $5 to $60. Executive membership fees increased by $10 to $120. At the time, the increases impacted about 35 million members.
The company generally raises membership fees every five years.
But with inflationary pressures in areas like labor and transportation still running hot, a hike in Costco's membership fees would go a long way to alleviating pressure on profit margins.
And it could also be very beneficial to Costco's stock price, if history is any predictor.
Guggenheim John Heinbockel's analysis of Costco's last three membership fee increases in 2006, 2011 and 2017 shows the stock rose on average 11% three months prior to the announcement. The stock gained on average 15% six months prior to the announcement.
Even without the fee increase, Costco continues to prove it could rack up big sales and profit gains as shoppers seek out ways to save.
Costco said second fiscal quarter comparable sales rose 14.4% from a year ago, paced by a 16% gain in Canada. Operating profits improved 35% to $1.8 billion.
Comparable sales in February rose 14%, led by a 17.4% increase in the U.S.