Costco members are taking an inflation hit. Here's how the warehouse retailer is managing rising costs.
Bob Nelson, Costco’s senior vice president of finance and investor relations, noted during the retailer’s third quarter 2022 earnings call that inflation "continues," saying that "pressures from higher commodity prices, higher wages,Nelson said that for the first quarter of its fiscal year, Costco estimated price inflation was around 4.5% to 5%, and in the 6% range for Q2. He said that "for Q3 and talking to our merchants, estimated price inflation was in the 7%-ish range.
Nelson was asked how the company balances passing along some price increases – particularly with prices on some items rising much higher than the estimates he provided – while still offering value to customers."We always want to be the best value in the marketplace," Nelson said.
Nelson gave an example of where the company reluctantly raised the price of its muffins and croissants by a dollar recently because the cost of various raw materials that go into them had doubled, tripled and even quadrupled. COSTCO ENDS MORTGAGE PROGRAM MEMBERSHIP PERK The company typically raises its membership fees every five or six years, and next month will be the five-year mark from the last increase in 2017.
Costco has raised prices in some areas in food and sundries, he said, adding that "the balance was slightly more in nonfoods than in foods" but that the company focused more on items than categories."We did see inflation in fresh foods come in slightly lower in Q3 versus Q2 a year ago as we began cycling high meat prices," Nelson said.
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