Costco Raises Membership Fees for First Time in 7 Years

Costco (COST) said it is raising its membership fees for the first time since 2017, sending the retailer’s stock higher in extended trading Wednesday.

Costco is hiking its “Gold Star” and business membership fees in the U.S. and Canada by $5 to $65, while executive membership fees will rise $10 to $130. The company also said that the maximum annual 2% reward associated with the executive membership will rise to $1,250 from $1,000.

The fee increases are expected to impact about 52 million memberships, and will go into effect from Sept. 1.

Higher Membership Fees To Boost Costco’s Revenue

The membership hikes bring an end to speculation about when the company would move to raise fees, after long hinting in earnings calls it would be a matter of “when, not if,” they increase.

The hike is expected to give Costco a revenue boost that CEO Ron Vachris suggested in May would give the company an added cushion allowing it to lower prices on products in its stores and offer greater value to customers.

Costco reported 74.5 million members at the end of its fiscal third quarter, up from 73.4 million in the second quarter, and 69.1 million a year earlier.

Costco’s Sales Surge 7.4% in June From a Year Ago

Along with announcing higher membership fees, Costco reported net sales for the month of June surged 7.4% from a year ago to $24.48 billion. Net sales for the first 44 weeks of the year were up 6.9% year-over-year at $210.55 billion.

Shares of Costco were 2.4% higher at $905.35 in extended trading as of 7:15 p.m. ET Wednesday following the news. They’ve gained close to 34% so far this year through Wednesday’s close.