Costco has announced that starting September 1, membership fees for its U.S. and Canada warehouse clubs will increase by $5. This raises the annual membership cost to $65 from $60, with the "Executive Membership" plan going up to $130 from $120. Over 52 million memberships will be affected, with more than half being executive memberships. Following the announcement, Costco’s shares rose by 2% in extended trading.
This is Costco’s first membership fee hike since June 2017. Historically, the company raises rates about every five and a half years, suggesting a possible increase in late 2022 or early 2023. However, due to ongoing high inflation affecting consumers, Costco postponed this adjustment. CEO Craig Jelinek and CFO Richard Galanti previously mentioned in interviews and earnings calls that economic conditions were not favorable for a fee increase.
Membership fees are crucial to Costco’s revenue strategy, allowing the company to maintain competitive merchandise pricing. In comparison, competitor Sam’s Club recently raised its membership fees for the first time in nine years, although its rates are still lower than Costco’s new fees. BJ’s Wholesale Club also offers slightly lower membership costs. Costco has also ramped up measures to ensure membership integrity, such as stricter checks at self-checkout aisles, similar to Netflix’s efforts to prevent unauthorized use.
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