Richard Galanti, the Chief Financial Officer of Costco, known for his straightforward and occasionally humorous style during earnings calls, concluded his notable 30-year tenure as the spokesperson for the warehouse club in the recent fiscal second-quarter earnings call.
Acknowledging his unparalleled service, Galanti expressed gratitude, stating, “Since Costco went public in December 1985, I have hosted all but one call. It has been an absolute privilege and honor to do so, so thank you all.”
Over the years, Galanti has frequently fielded inquiries about potential increases in Costco’s membership fees. Typically revised every five to six years, the fees have remained unchanged since 2017, with Gold memberships at $60 and Executive memberships, inclusive of 2% cash back up to $1,000, priced at $120.
During his final earnings call as CFO, Galanti addressed the lingering question about a potential fee hike, especially given Costco’s slightly below-expectation second-quarter results. Despite falling short of Wall Street forecasts, the warehouse club reported a robust quarter, with net sales increasing by 5.7% to $57.33 billion.
Membership growth and renewal numbers also demonstrated strength, with membership-fee revenue reaching $1.11 billion, an increase of $84 million (8.2%) from the previous year. Galanti highlighted renewal rates, stating, “At the second-quarter end, our U.S. and Canada renewal rate came in at 92.9%, which is up 0.1% from Q1, and the worldwide rate came in at 90.5%, similar to the last quarter.”
Costco ended the second quarter with impressive figures: 73.4 million paid household members (up 7.8% from the previous year) and 132 million cardholders (up 7.3%).
Despite these strong metrics, Galanti addressed the persisting question about a potential membership fee increase, reiterating the familiar refrain, “It’s when, not if.” He emphasized that the decision would be based on factors such as renewal rates, new member sign-ups, and overall loyalty, indicating the company’s commitment to ensuring favorable conditions before making such a decision.
Closing the discussion, the outgoing CFO emphasized that no definitive decision had been made. On March 15, Galanti will pass the torch to Gary Millerchip, former CFO at Kroger, as his successor.
Galanti, at 67, leaves an indelible mark on Costco’s financial leadership, and his successor will inherit a robust and thriving business poised for continued success.
