COST Costco Wholesale Corporation

Gasoline continues to be part of the value proposition for Big Box club Costco and marketers can expect a rate of new warehouse openings of around 23 per year.

The company now boasts just over 860 clubs in North America and overseas and most of the expansions will involve properties in the U.S. and Canada.

Company officials remain reticent to discuss gasoline margins or sales in depth, but Chief Financial Officer Richard Galanti observed that gasoline profits are stronger than they were in previous years, although down a bit from some epic margins in 2022. He suggested that most retailers who offer gasoline "want to make a little more on gas" these days than perhaps previous years. He hinted that Costco would continue to charge in the "mid-30s" below competition, noting that the company's fuel offering could be anywhere from 10cts/gal to 45cts/gal below others.

"We feel good about our competitive position and gasoline is still quite profitable, although down a bit from year ago but still very profitable," Galanti observed.

The most recent reflation of gas prices has not impacted spending at the clubs, he added. The company now has an app that details its gasoline offering for members in the warehouse, but there was no color on whether special offers on fuel might be planned.

The company posted very strong earnings for its fiscal 2023 fourth quarter and boasted of robust renewal rates. Shopping frequency was up 5% in the U.S. and renewal rates on membership ticked up 0.1% to 92.7%.

Most analysts on Wall Street expect Costco to raise membership fees in fiscal 2024, and Galanti noted that they were on a stretch of nearly six years without a fee increase.

The Costco CFO acknowledged that the company was testing EV charging at a number of locations but didn't offer any commentary on how those trials are proceeding.

This content was created by Oil Price Information Service, which is operated by Dow Jones & Co. OPIS is run independently from Dow Jones Newswires and The Wall Street Journal.

--Reporting by Tom Kloza, tkloza@opisnet.com; Editing by Michael Kelly, mkelly@opisnet.com

(END) Dow Jones Newswires

September 27, 2023 16:05 ET (20:05 GMT)

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