Costco announced Wednesday plans to raise its membership prices effective Sept. 1. Costco said its basic membership rate will increase from $60 per year to $65. Executive members will soon pay $130 annually, a $10 increase from the current fee.
One positive change for customers with an executive membership is the maximum annual reward amount will also go up. It currently is capped at $1,000 per year, but will soon be $1,250. Customers with executive memberships are given a check worth up to 2% of what they spend at the retailer each year.
Costco has continued to report massive growth, according to its recent earnings reports. Costco reported in late May having a 7.6% increase in memberships this year compared to last, bringing its total number of memberships to 75.5 million. Of those, 34.5 million have executive memberships.
Company Chief Financial Officer Gary Millership said in a call to investors in late May that it was a matter of when and not if Costco would increase membership fees.
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"We've historically looked at increasing the membership fee every five years or so," Millership said. "And obviously, we're beyond that time period now in terms of what would be the typical cycle. There's nothing about anything that we see within how the business is performing that's changing our view on that. We feel really good about membership renewal rates. We feel really good about the test of are we delivering significantly more value to members than we were or have since we last increased the membership fee. But I think we are our own probably toughest competitor in that."
In June 2017, Costco increased its basic membership price from $55 to $60, and its executive membership from $110 to $120.
Although membership fees will soon increase, Millership has assured investors the price of its hot dog and soft drink combo will remain $1.50.
Millership also said that as inflation starts to level off, the company has seen a recent increase in purchases of discretionary items, including toys, tires, lawn and garden, and health and beauty items.
Costco expects to end the current fiscal year with 614 U.S. locations, an increase of 23 from the end of the last fiscal year.
According to the National Retail Federation,Costco is the nation's third-largest retailer, behind Walmart and Amazon.
