Costco Wholesale Corporation (NASDAQ:COST) Q1 2023 Earnings Call Transcript

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And hopefully, that’s not a pressure point going forward. Certainly, I don’t think it will be as much. And again, there are so many moving parts to this equation. I wish it was as easy as each basis point we could explain. We try to give you the rounded numbers. But overall, again, I get back to we feel good about how we’re doing competitively. And we certainly understand that big ticket discretionary things have shown a little weakness, in part, because of our strength from a year ago, and in part, it’s got to be part of the economy. And the good news is we have a big chunks of our business that are fresh foods, food and sundries, health and beauty aids, gas, all those types of things. And even other things like that’s small, but travel has come back really strong from a really weak place a couple of years ago.

Rupesh Parikh : Great. And then maybe just one additional question just on the membership fee hike. If we are in a weaker economic backdrop next year, does that at all impact how you guys are thinking about the timing of the membership fee hike?

Richard Galanti : Well, it certainly goes into the thought process. We’re still not even to the average of the last three increases in terms of timing between the last one and the next one. What we’ve said again, and I’ll say again, is that our view is all the parameters, as it relates to member loyalty and value proposition that we’ve improved to our member we have no problem thinking about doing it and doing it ultimately. So it’s a question of when, not if. But we feel that we’re in a very strong competitive position right now. And if we have to wait a few months or several months, that’s fine. And I’ll be purposely coy on when that might be.

Operator: We go next now to Paul Lejuez at Citi.

Brandon Cheatham : It’s Brandon Cheatham on for Paul. First one, I wanted to dig into the decision on holding the price on fresh. Are you seeing competitors do the same and that’s why you reacted there? Or are you kind of trying to lead the charge there? And just curious like why make that decision since it seems like the consumer has been happy to take increased price, especially in fresh?

Richard Galanti : The last thing you said there is exactly, I think, why we chose to do a little more there. We want to be the most competitive, and we can drive a lot of volume. And again, we’re in it for the long term. And it’s — fresh is one of those unique areas where prices on many items do change almost weekly on some of those items. If not sooner, if not more quickly. And so our buyers are always looking at the, if you will, the supermarket ads as well as the other warehouse club ads, not literally ads, but what the pricing is, and we react to that. But we’re also — part of it is also consciously keeping the price on the chicken at $4.99, and keeping — and those types of things, keeping the price on the hotdog. All those things go into that equation as well. But we know that, that can be a driver of business. Fresh, we got great stuff, and people do notice the price. In our view, people notice those prices differences.

Brandon Cheatham : And just a quick follow-up. You have a large competitor that’s been talking about increased members in the $100,000-plus income cohort. Obviously, it’s not impacting your membership numbers, but I’m just wondering, do you see any impact on share of wallet or any thoughts there? Do you look at how many of your members might have additional memberships as well?

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