Costco Raising Membership Fees for the First Time in 6 years
(CBS NEWS) Costco is raising its membership fees $5 starting June 1, the retailer announced while reporting lower-than-expected sales in its latest quarterly filing.
A Gold Star membership will cost $60 annually, up from $55, the retailer said. An Executive membership, which comes with an annual 2 percent reward and some additional discounts, will increase to $120, from $110 currently. The company is also increasing the maximum reward executive members can get to $1,000 a year, from $750 currently.
The fee hikes will impact around 35 million members, Costco estimated.
Costco is the second-largest retailer in the U.S., behind Walmart (WMT), with 508 warehouses in the U.S. and 94 in Canada. The retailer posted $29.8 billion in sales in the past quarter, below Wall Street estimates of $29.9 billion. Costco shares closed 5 percent lower Friday, and were trading at $167.47 Monday morning -- a drop of 6.6 percent below the Thursday close.
The last time the retailer hiked membership rates was in fall 2011. About 74 percent of Costco’s operating income last year came from those fees, according to the company. But it’s unclear how helpful the fee increase will be to Costco’s bottom line. Dropping commodity food prices are driving increased competition for shoppers’ dollars, and the growth of low-cost grocery stores like Aldi in the U.S. is putting pressure on the bigger chains to keep up.