Costco Wholesale COST-Q 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.