Costco Earnings Beat Expectations -- and Membership Fees Are Holding Steady

Hint: It has to do with saving money -- or, rather, not spending more.

Many of us who shop at Costco regularly may be more inclined to pay attention to things like current sales and seasonal offerings than how well Costco is doing as a company. After all, if you don't own shares of Costco stock, you may not care whether the company's earnings are solid during a given quarter or not.

But here's why you should care. The more money Costco makes, the less money Costco has to charge for things like membership fees. And in light of its most recent earnings report, current members can breathe a sigh of relief that they won't be in for a fee hike any time soon.

Positive fourth quarter results

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, it ends in August). And while investors were worried the numbers wouldn't be positive, they got a pleasant surprise.

During its last quarter, Costco acquired a lot of new members and reported higher revenue than expected. Given the way inflation has been impacting retailers' profit margins, that's 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 membership and $120 for an executive membership.

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 their savings or rack up debt on their credit cards just to stay afloat. The fact that Costco isn't hiking up membership fees is a good thing, because right now, the last thing shoppers need is a higher price tag.

Granted, even if Costco were to impose higher membership fees, they wouldn't necessarily break the bank. Members might be looking at something along the lines of an extra $5 to $10 per year. But still, at a time when every single bill is costing more, not having to pay an extra $5 or $10 helps.

That said, Costco members can't write off the possibility of an eventual fee hike. The last time Costco fees went up was June of 2017. Given that it's been more than five years since then, a near-term fee hike wouldn't be unheard of -- especially since Costco typically raises its membership costs every five years or so.

But for now, members are getting 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, however, mean you won't end up paying more for some of the items you buy at Costco. Like other retailers, Costco has had to raise prices to account for its higher costs. But if you have a larger family to feed, you're likely to find that Costco's prices are still among the most competitive -- even if they're higher than they were a year ago.