Costco (Costco) membership fees will reportedly increase again. The picture shows the Gold Star Master Card.
As the Chinese Communist virus (Wuhan pneumonia) pandemic forces businesses to close, Costco’s electric rotisserie chicken, Kirkland bacon and large piles of cheese seem to be gaining popularity. And the outbreak doesn’t look to have affected the warehouse chain’s phased-in membership fee increases.
“Membership fees look set to rise over the next 18 months.” Wells Fargo equity analysts said in a research note Thursday (March 11) that the membership hike would be a “potential catalyst” to boost its sales and earnings.
Costco memberships are currently priced at $120/year for Gold Star Executive and $60/year for Gold Star Everyday.
Costco last raised membership fees in June 2017, when the two aforementioned membership fees were increased by $10 and $5, respectively.
According to analysts, Costco increases membership fees every 5 to 5.5 years. This suggests that the “value” of its U.S. and Canadian customers will rise in the second half of 2022, while international customers’ memberships are expected to “appreciate” in 2021.
In that case, the latest round of dues increases are expected to boost earnings per share by 4% to 5%. The retailer has more than benefited from the outbreak of the Chinese Communist virus (Wuhan pneumonia) pandemic over the past year or so.
Costco sales rose at the height of the Home order. The reason for this is that Americans were stocking up on big-ticket items during this period. But most notably, the company, known for its oversized warehouses, is also seeing growth in online shopping.
The company ended its fiscal second quarter with 59.7 million members, up from 59.1 million 12 weeks ago, according to its latest earnings call.
At the same Time, the total number of cardholders increased to 108.3 million from 107.1 million 12 weeks ago. The number of “premium” members increased by 506,000 to 23.8 million.
In fact, analysts said, its membership model, including its pricing, merchandising, experience and overall customer loyalty, remains a sustainable competitive advantage over its competitors.
Costco declined FOX Business’ request for comment.
Publicly available information shows that Costco is the second largest retailer in the U.S., the seventh largest retailer in the world and the number one chain of membership-based warehouse stores in the U.S. It was founded in 1983 in Seattle, Washington.
Costco has more than 500 stores in nine countries, most of which are located in the United States, with Canada being the largest foreign market.
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