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Costco to maintain $1.50 hot dog-and-soda combo ‘without end’ despite inflation: exec


A top Costco Wholesale executive confirmed the big-box retailer has no plans to vary the worth of its $1.50 hot dog-and-soda combo at its stores despite months of decades-high inflation.

Costco CFO Richard Galanti reiterated the low-cost price point on the fan-favorite deal would stay in place through the company’s fourth-quarter earnings call on Thursday.

An analyst asked whether Costco was adjusting prices in other parts of its business to take care of sales margins for its hot dog-and-soda deal and other value offerings.

“Lightning just struck me,” Galanti joked when the combo was mentioned. He added that higher-margin businesses corresponding to gas and travel sales help Costco maintain its value deals.

“Those things help us be more aggressive in other areas, or as you mentioned, hold the worth on the recent dog and the soda a little bit longer – without end,” Galanti added.

Costco and other retailers have hiked prices during the last yr, passing along the upper costs of commodities and goods to consumers. Inflation has barely declined in recent months but was still hovering at a hotter-than-expected 8.3% in August.

Costco’s $1.50 combo deal is here to remain.AFP via Getty Images

CostcoCostco has hiked prices on some items as a consequence of inflation.Getty Images

Galanti estimated that price inflation at Costco was about 8% through the fourth quarter, with increases “a little bit higher on the food and sundries side.”

Costco doesn’t have any immediate plans to hike its membership fees, in response to the chief. Annual membership dues on the retailer currently start at $60.

CostcoCostco has no immediate plans to hike membership fees.SOPA Images/LightRocket via Gett

Still, Galanti noted that membership price increases were likely in some unspecified time in the future in the longer term. Costco has generally hiked its fees roughly every five to 6 years.

“Our view is, is we’re confident in our ability to achieve this and in some unspecified time in the future, we are going to. Nevertheless it’s an issue of when, not if,” Galanti said.

Despite the inflationary environment, Costco topped analysts’ expectations within the fourth quarter. The retailer posted quarterly revenue $72.09 billion and earnings per share.

CostcoCostco beat earnings expectations for the fourth quarter.SOPA Images/LightRocket via Gett

But shares still fell greater than 4% in trading Friday after executives noted a decline in gross margins.

Costco executives have famously avoided climbing prices of their food courts, especially for the recent dog-and-soda combo, no matter changes within the economy.

In July, Costco CEO Craig Jelinek delivered a one-word answer when asked on CNBC whether prices changes were being considered for the deal.

“No,” he said.

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