Costco announces its first membership fee hike in seven years.
Costco plans to use the additional revenue from the higher fees to increase wages for employees and lower prices in stores.
Membership fees are increasing by $5 to $65 for Gold Star and business members, and by $10 to $130 for executive members.
The changes will take effect in September in the US and Canada, impacting approximately 52 million memberships.
In a significant move for one of the largest warehouse clubs in the United States, Costco has announced its first membership fee hike in seven years. The popular retailer is raising its annual membership fees by $5 to $65 for Gold Star and business members, while executive membership fees will increase by $10 to $130. These changes are set to take effect in the US and Canada starting in September, impacting approximately 52 million memberships. Costco has stated that it plans to use the additional revenue from these higher fees to increase wages for its employees and lower prices in stores, enhancing the value proposition for customers.
Analysts have responded positively to this announcement, with Jefferies raising their price target for Costco stock to $1,050 from $860, projecting a 3% increase in earnings per share over the next two years. Bank of America also raised their price target, from $874 to $962, stating that Costco's gain in share within the current environment could be attributed to consumers adjusting to higher prices. Despite these positive projections, Costco's shares fell 4.3% on Thursday following the announcement.
This fee increase comes after key rivals Sam's Club and Amazon raised their membership fees more than two years ago. The move is seen as a strategic decision by Costco to maintain its competitive edge in the face of high inflation, rising gas prices, and other economic challenges. With these changes, Costco aims to continue providing value to its customers while also ensuring financial stability and growth for the company.
Costco is increasing its annual membership fees for the first time in 7 years.
The base Gold Star Membership fee will increase by $5 to $65 annually.
The Executive Membership fee will increase by $10 to $130 annually.
Costco last raised its membership fees in the US and Canada in June 2017.
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The author does not make any explicit fallacious statements in the article. However, there is an implicit appeal to authority when Tim Calkins' opinion about Costco's infrequent fee increases is mentioned.
Tim Calkins, a clinical professor of marketing at Northwestern University’s Kellogg School of Management, was surprised by how infrequent Costco’s fee increases have been.
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