Costco Announces Membership Fee Increase in Canada

Costco, the popular wholesale retailer, has announced an increase in its annual membership fees for both Canadian and U.S. members starting this fall. This news comes as the company released its sales results for June, reflecting its ongoing financial growth.

Effective September 1, Canadian members holding individual, business, or business add-on memberships will see their annual fees rise by $5, bringing the total to $65. Executive memberships in Canada will experience a $10 increase, raising the fee to $130. In addition to the fee hike, executive members will benefit from an increased maximum annual reward.

U.S. Costco members will face similar increases, with individual and business memberships also rising by $5 and executive memberships by $10.

The fee increases will affect approximately 52 million memberships, with over half being executive memberships. Costco memberships offer a variety of incentives, including free sample testing, discounts on food, gas, home insurance, travel, grocery items, and an annual 2% reward on qualified purchases at its warehouses. The maximum annual reward for executive members will increase from $1,000 to $1,250.

Costco’s shares have surged about 34% this year, and following the announcement, they rose by 2.2% in extended trading. Michael Ashley Schulman, Chief Investment Officer at Running Point Capital Advisors, noted that the market has anticipated a membership fee hike for a couple of years. Schulman remarked, “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.”

In the third quarter ending May 12, revenues from membership fees increased by approximately 7.6%. For fiscal 2023, membership fee revenue accounted for 1.9% of Costco’s total revenue.

Alongside the membership fee hike, Costco reported a 7.4% increase in net sales for the retail month of June, amounting to $24.48 billion. This reflects the company’s robust financial health and its strategy to enhance revenue through membership fees.

Costco’s decision to increase membership fees underscores its confidence in continued growth and the value it provides to its members. As the changes take effect in September, both Canadian and U.S. members will see a slight rise in their annual fees but will also enjoy enhanced rewards and benefits. The market’s positive reaction to the announcement indicates strong investor confidence in Costco’s strategic direction and financial performance.