Costco's Higher Membership Fees May Start This Summer

Popular club Costco. Over 68 million individuals worldwide pay for access to its discount warehouses, including over a million new members

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The company makes most of its money from membership fees—nearly $1 billion last quarter—but members haven't paid a dime more in over five years. 

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Company officials have hinted at a fee increase for months. "A question of when, not if," Costco CFO Richard Galanti remarked during an earnings call last week.

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Many expect greater prices because previous increases occurred five years apart in 2006, 2011, and 2017.

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"I suspect that they'll announce it later this spring and implement it early this summer," Michael Lasser, UBS US Hardline & Broad-line and food retail analyst

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Lasser said the warehouse club will cut grocery and other prices with fee money to make it more competitive and appealing to new members.

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"What they find is that as they get the profit infusion from this fee—because it really is pure profit—that they take a portion of that and

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reinvest it back in lower prices," said Lasser. That fuels the model. It distinguishes Costco from other merchants."

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Costco claimed an all-time high membership renewal rate of 92% in the US and Canada during last week's earnings call.

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