Costco is currently the only big name in the wholesale industry in America that has actually seen gains in its earnings amid multiple closures and bankruptcies happening around. It was revealed in the earnings call earlier this month how the warehouse club generated a net income of $1.7 billion. These earnings were made in the final months of 2024, which was 2% more than what they earned in 2023. Its comparable sales in the United States also saw an 8.3% increase. However, there is still an exception that led to the changes in membership perks. If you want to know more about the perk changes, the following article is for you.
Costco Membership Perk Change: Gradual Decrease In Profits From Gas Sales
A gradual decrease in the profits from gas sales is the exception that led to a change in the member-favorite membership perks. The gas sales of Costo shrank in the last quarter of 2024. Gary Millerchip, who is the Chief Financial Officer of Costco, mentioned the fall in sales is because of the average price per gallon going slightly down. The average prices started seeing a drop from last April and stood at $3.20 in September. This increased competition for Costco, which offers low prices for its members exclusively.
CEO Ron Vachris Updates The Costco Membership Perks
Ron Vachris, who is the CEO of Costco, announced an update on the membership perks changes during the call. He mentioned that the company is going to increase the number of warehouses to serve its members. Ron also added that in addition to that, Costco is extending the gas station hours in North America during the quarter. This is to make filling up at Costco more convenient. He announced that the Costco stations will now stay open an hour later than they usually do while some might open earlier too. The company shares a list of updated gas station hours on Facebook in February. The opening hours on weekdays will be 6 AM to 10 PM, on Saturday will be 6 AM to 8:30 PM, and on Sunday will be 6 AM to 7 PM.
Possible Extension Of Store Hours
During the same call, Ron also revealed that they are considering the possibility of an extension of store hours as well. He reported that Costo did receive a demand from commuters for both evening and early hours. So, this will benefit those members greatly. He also added that the company is still looking at the possibility of an extension in the warehouse hours and does not have plans for it currently.
Millerchip Warns About Changing Consumer Behavior
Gary Millerchip, the CFO of Costco, in a statement, warned about the changing spending behavior of its members. He explained how the consumers are now focussed on quality, value, and newness. Millerchip also added that consumers are now very careful and choiceful while spending their dollars. He stated that they can expect this behavior to continue, especially after the return of inflation and the impact of tariffs. The company has definitely seen an increase in sales of fresh food and low-cost meat items. However, the sales of electrical appliances and apparel have seen a fall.
Boycott Threats
The company also witnessed significant boycott threats from consumers in the month of January. This was after a group of its shareholders introduced a proposal to get rid of the diversity, equity, and inclusion program. The shareholders who advocated the end of DEI expressed concerns about it potentially causing legal, financial, and reputational harm. Most of the shareholders voted against the anti-DEI proposal which infuriated consumers even more.
