Costco's New Announcement About Membership Fees Is Good News For Shoppers
For months now, Costco has been hinting at an imminent increase in its membership fees.
Historically, the popular warehouse club and third-largest U.S. food retailer raises its fees about every five years or so. The last bump came in 2017, when the cost of a basic membership went up $5 to the current rate of $60 annually, while a perks-loaded "executive" membership jumped by $10 to $120 annually.
Paying for a membership entitles cardholders to stroll the seemingly endless aisles of discounted products at any of the company's 847 warehouses worldwide.
Analysts have been predicting another fee increase since at least 2021. Costco competitors Amazon Prime and Sam's Club both raised their membership fees last year, while Costco stood pat, even as company officials kept everyone in suspense about an inevitable hike in fees sometime down the road.
Just last month, Costco CFO Richard Galanti told investors "it's a question of when, not if," adding, "I'll be purposefully coy on when that might be."
On Thursday, the company's shareholders gathered online for their annual meeting, and after a lengthly presentation on the company's financial performance, the hot-button issue came up once more.
And yet again, officials indicated they are holding off. At least for now.
"In our opinion, right now is not the right time to do it," said Costco CEO Craig Jelinek, echoing a similar statement he made last summer. "That's not to say that at some point we won't, but at the moment we have no plans to take up the fee."
Costco raked in over $4.2 billion in membership fees alone last year, up 9% percent from 2021, according to the company's latest annual report.
Raising the yearly fee by another $5 or $10 might not sound like a lot on an individual level, but for a club with over 66 million memberships like Costco, it quickly adds up.
The last fee increase boosted the company's annual revenue by more than $250 million.