By Granth Vanaik
(Reuters) – Costco Wholesale said on Wednesday it would hike annual membership fees for the first time in seven years for its U.S. and Canada customers, effective Sept. 1.
The retailer’s memberships offer a range of incentives to customers, including testing of free samples, discounts on food, gas, home insurance, travel and grocery items and an annual 2% reward on qualified purchases at its warehouses.
The annual fee, last raised in June 2017, would increase by $5 to $65 for “gold star” and business members and to $130 from the earlier $120 for executive members, the company said.
Costco said the maximum annual 2% reward associated with executive membership will also increase to $1,250 from $1,000.
The hike will affect around 52 million members, a little over half of them being of the executive category, the membership-only retailer said.
The company’s shares, up about 34% this year, rose 2.2% in extended trading.
“The market has been expecting (discussion of) a membership fee hike for a couple years … management historically tends to raise membership rates every 5 to 6 years,” said Michael Ashley Schulman, chief investment officer at Running Point Capital Advisors.
“This announcement will be a welcome relief to those who have been waiting for it and should provide a solid lift to revenue as well as the stock,” Schulman added.
Revenues from membership fees had increased about 7.6% in the third quarter ended May 12. For fiscal 2023, membership fee revenue accounted for 1.9% of the company’s total revenue.
Separately, Costco reported on Wednesday a 7.4% increase in net sales to $24.48 billion for the retail month of June.
(Reporting by Granth Vanaik in Bengaluru; Editing by Mohammed Safi Shamsi)
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