Costco Membership Fees May Soon Cost A Little More

April 12, 2017

Costco Membership Fees May Soon Cost A Little More

Costco membership fees may increase 10% in the next two or three months.

Michael Lasser, a UBS analyst, said fees for the warehouse chain's basic membership would increase by $5 to $60. An increase of its executive membership will rise by $10 to $120. Lasser said the company's proposed fee hike could be announced soon but made be mentioned later in the year.

While Costco hasn't said anything about the potential rate hike, it's not dismissing the idea either.

Richard Galanti is Costco's CFO, and he said it might be time for the company to increase its fees, but said it wouldn't be an immediate rate increase. He said Costco raises its fees every five to six years, with January 2017 being the fifth anniversary of its most current U.S. fee increase.

Costco raised its fees in the UK, Japan, Korea, Taiwan and Mexico by 10%.

Lasser said if the fee does rise, it wouldn't have a tremendous impact on membership renewals and sales, which are more than 90% in Canada and the U.S. He said an increase would actually boost shares.

He said the company had solid traffic growth in both December and January. He said this could be because of the intrigue in the company's value proposition customers have. He said renewals are likely to stay above 90% in the U.S. and Canada and about 87% for the rest of the world.

According to the UBS, Costco's income from its membership fees increased 6.7% during the second quarter to $643.5 million. The firm said same-store sales increased 3.7%.