Costco Raises Annual Membership Fee for First Time Since 2017

Wis increasing its membership fees for the first time since 2017, increasing the basic membership price from $60 to $65 per year.

The 8% price increase for U.S. and Canadian members will take effect September 1, Costco said in a declaration Wednesday. The retailer’s premium membership price will increase from $120 to $130. The change will affect about 52 million members.

Costco shares were up 2.4% at 5:40 p.m. in extended trading in New York. Shares are up 34% this year through Wednesday’s close, outpacing the advance of the S&P 500 index.

Investors and analysts have long expected the Issaquah, Washington-based company to raise its membership price. Costco typically raises rates every five years or so, which has led analysts in recent quarters to ask about the company’s take on the timing.

Executives said the increase was just a matter of time and that the company has seen strong renewal rates, new signups and customer loyalty. In their earnings forecasts, they acknowledged that an increase took longer than usual to materialize.

Bloomberg Intelligence analyst Jennifer Bartashus wrote in a note Wednesday that the rate hike was expected and delayed given Costco’s usual five-year cadence.

“The company delayed an increase due to consumer concerns about inflation and the economic outlook, which have eased somewhat,” she wrote, adding that she expects renewal rates to remain stable after the increase.

U.S. consumers have faced rising prices across the economy in recent years, although the increases have begun to moderate. Retailers expect inflation to return to more normalized, low-single-digit levels this year, and have reported declines in some areas, including general merchandise.

Costco’s customer base tends to be wealthier due to the company’s membership model, and it has been relatively insulated from the broader contraction in sales growth and discretionary spending across the industry. The company said Wednesday that U.S. comparable sales, excluding gasoline, grew 6.3% in June from a year earlier.

Member revenue is especially important to Costco, which has used the proceeds to invest in its operations and keep product prices low. The higher rates will provide favorable profits for Costco, which tries to attract shoppers with low bulk prices for a relatively narrow range of products. Premium memberships have driven growth and represent just over half of Costco’s total paid membership.

Costco named a new chief financial officer earlier this year, hiring Gary Millerchip from Kroger Co. Ron Vachris has served as chief executive since January. The company has been adding more stores in the US and abroad, while investing in e-commerce.

The company is following Walmart Inc.-owned Sam’s Club in raising the price of its membership as U.S. consumers flock to warehouses that offer wholesale quantities of products. Sam’s Club driven its annual fee to $50 for basic and $110 for premium in 2022, though it used its rewards program to return the extra cost to members during the first year.