A senior Costco Wholesale executive has confirmed that the big-box retailer has no plans to reprice its $1.50 hot dog and soda combo in its stores despite months of decades of high inflation.
Costco Chief Financial Officer Richard Galanti reiterated that the discount price of the fan-favorite deal would remain in place during the company’s fourth-quarter earnings call on Thursday.
An analyst asked if Costco is adjusting prices in other parts of its business to maintain sales margins for its hot dog and soda deal and other value offerings.
“Lightning just hit me” Galanti joked when the combo was mentioned. He added that higher-margin businesses such as gasoline and travel sales help Costco maintain its value offerings.
“These things help us be more aggressive in other areas, or as you mentioned, hold the price of hot dog and soda down a bit longer – forever,” Galanti added.
Costco and other retailers have raised prices over the past year, passing higher costs of commodities and goods onto consumers. Inflation has eased slightly in recent months, but was still at a higher than expected 8.3% in August.
Galanti estimated price inflation at Costco was around 8% in the fourth quarter, with increases “a bit higher on the food and sundries side.”
Costco has no immediate plans to increase its membership fees, according to the executive. Annual dues at the retailer currently start at $60.
Still, Galanti noted that membership price increases were likely at some point in the future. Costco has generally increased its fees about every five to six years.
“Our view is that we are confident in our ability to do it and at some point we will. But it’s a matter of when, not if,” Galanti said.
Despite the inflationary environment, Costco beat analysts’ expectations in the fourth quarter. The retailer reported quarterly revenue of $72.09 billion and earnings per share.
But shares fell another more than 4% in trading on Friday after executives noted a drop in gross margins.
Costco executives have notoriously avoided raising prices in their food courts, especially for the hot dog and soda combo, regardless of changes in the economy.
In July, Costco CEO Craig Jelinek provided a one-word answer. when asked on CNBC whether price changes were contemplated for the transaction.
“No,” he said.