Costco is raising its annual membership fees by $5 for non-executives and by $10 for executives in the United States and Canada.
The change is effective September 1 and will impact around 52 million memberships, Costco said in a statement. Costco has traditionally raised its membership prices by $5 to $10 every five-and-a-half years, so the latest increase should not come as a shock to members since the last increase was in June 2017.
Additionally, management has been clear about its plans to raise membership fees. On its conference calls in December 2023 and March of this year, Costco’s chief financial officer said the fee increase was a matter of “when, not if.”
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The new Costco fee for non-executive memberships in the U.S. and Canada will be $65, up from $60. Executive membership fees will be $130, up from $120, which consists of the $65 primary membership fee plus the $65 Executive upgrade.
In addition, the maximum annual 2% reward associated with Executive memberships will increase to $1,250 from $1,000.
For comparison of Costco vs Sam's Club, Sam's Club membership is $50. But if you know the secrets to shopping at Costco, you can find ways to make up that $15 annual difference.
Costco stock reacts to the announcement
Costco (COST) stock is down by more than 3% following the membership price increase, but analysts are bullish on the stock going forward. According to S&P Global Market Intelligence, the consensus recommendation among analysts it tracks is a Buy.
However, analysts’ price targets have struggled to keep up with COST’s run higher. Indeed, shares are up more than 31% in 2024 and over 61% in the last year. Currently, the average price target is $874.41, representing implied upside of just about 2% to current levels.
Financial service firm Oppenheimer is one of the most bullish outfits on COST stock with a Buy rating and an upwardly-revised price target of $950.
“COST's performance continues to stand out in a difficult retail backdrop, and we expect share gains to continue,” Oppenheimer analyst Rupesh Parikh said in a July 10 note. “In addition, management finally announced a membership fee increase that has been anticipated for some time. We are lifting our estimates to reflect the increase.”
Oppenheimer’s $950 price target implies upside of about 11% to current levels.
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