Costco exec quietly confirms bad news for all members this month – which means fewer savings this holiday season

A Costco executive has quietly confirmed some bad news for members hoping to find the same deals they enjoyed last Christmas.

Costco customers must pay membership fees of $60 or $120 per year, which helps the retailer keep prices low at its 600 U.S. stores. For example, the company's famous hot dog and soda deal has cost $1.50 since 1985.

Last year, several major retailers faced a glut of stock – including expensive items such as televisions – as data from earlier periods during the Covid-19 pandemic no longer reflected spending patterns.

Many shoppers spent money during the Covid lockdowns because they had too much money to spend. This meant that many retailers received additional merchandise in 2022 amid declining demand, which they then sold at deep discounts.

This year, Costco Chief Financial Officer Richard Galanti suggested there will be fewer of these extreme discounts during the holiday season.

A Costco manager has quietly confirmed some bad news for members hoping to find the same deals this holiday season as last year (Photo: A Costco store)

This is evident from the company's fourth quarter earnings figures The streetGalanti said: “Our year-over-year margin improvement is partly due to fewer markdowns due to better inventory positions this year than last year. Our stocks are generally in good condition.”

In short, the company has corrected its inventory levels to better reflect purchasing behavior – meaning there will be less unwanted inventory left this year.

Galanti told investors earlier this year that shoppers had scaled back spending on larger and more expensive items such as refrigerators and TVs, choosing cheaper chicken and pork products over beef.

However, in the latest earnings call, Galanti added that prices at the retailer would not be significantly affected by 'shrinkage' or inventory loss due to theft.

Other stores, including Target and CVS, have had to close their stores due to rising shoplifting and organized crime.

Galanti told DailyMail.com that inventory loss was less of an issue for Costco because only paying members can enter the warehouses.

“You have to show your photo ID when you enter our warehouse, so the fact that it's members only is a positive,” he said.

The uniform layout of most Costco warehouses also puts physical barriers between thieves and valuable inventory.

“We always had one way in and one way out, and people checked receipts at the door,” he added.

CFO Richard Galanti said there were 'fewer markdowns this year due to better inventory positions than last year'

While retail giants across the US are closing their stores and suffering critical losses due to shoplifting, Costco appears to have emerged relatively unscathed.

Most retailers operating in shopping centers have multiple entrances and exits.

In a report summarizing its 2022 financial year, Costco noted that “by strictly controlling entry and exit points and using a membership format,” it was able to keep inventory losses “well below those of typical retail operations.”

Costco also sells items in bulk, making it difficult to sneak smaller items past the employees who check customers' receipts as they leave.

“Many items are larger size items, and if you have smaller, higher value items, they come in packaging that is much larger,” Galanti says. This includes items like Gillette razors, which come in an oversized flat pack.

Galanti told investors that inventory shrinkage rose about 0.02 percent when self-checkout machines were introduced in some warehouses during the pandemic.

But he told DailyMail.com that he wasn't really concerned about that revival or worried about continuing to deploy them in the future.

“Mistakes are made,” he said. “Even at the exit door we find fault in both directions.”