Costco is raising its membership fees by nearly 10% on June 1.
The warehouse chain’s fees will increase by $US5, to $US60, for its basic membership and by $US10, to $US120, for its executive membership, the company said Thursday.
The fee increases will impact roughly 35 million Costco members.
Costco last raised its membership fees in November 2011.
The increases shouldn’t have a major impact on sales and membership renewals, which are at a rate above 90% in the US and Canada, according to UBS analyst Michael Lasser. In fact, an increase should support a boost in shares, he said.
“Traffic growth was solid across the company in December and January (up an average of 4% in the US and 3% worldwide),” Lasser wrote in a recent research note. “This suggests members continue to be intrigued by the company’s value proposition, and leads us to believe that renewals likely at least remained steady at 90.3% in the US and Canada and 87.5% worldwide.”
UBS estimates that Costco’s income from membership fees rose 6.7% in the second quarter of the year to $US643.5 million compared with the same period last year. The firm is also estimating that same-store sales grew 3.7% during the period.
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