Costco is raising its membership fees.
Effective June 1, Costco will increase its membership fees by $5 for U.S. and Canada Goldstar (individual), Business, and Business add-on members, the company said Thursday as part of its second-quarter earnings release.
That means these members will pay an annual fee of $60 starting in June.
Annual Executive membership fees in the U.S. and Canada will go up from $110 to $120. The maximum annual 2 percent reward associated with the Executive membership will increase from $750 to $1,000.
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The fee increases will affect around 35 million members, roughly half of them Executive members, the company said in its release.
A membership fee hike has been expected for some time now.
Costco said in March last year that it was considering raising its membership fees — something it does every five to six years. The last time the membership fee was increased was January 2012.
Costco CFO Richard Galanti didn’t specify at the time when such a membership fee hike would occur but said it wouldn’t be logical to raise fees until after the company transitioned from American Express to Citigroup and Visa for its co-branded credit card and credit card network. That transition happened in June.
Membership fees make up only a small percentage of Costco’s revenues. But those fees contribute significantly to Costco’s bottom line.
Ken Perkins, an equity analyst with Morningstar, said last year that around 70 percent of Costco’s operating profit comes from membership fees.