Costco (COST) stock price rises due to fee increase plan

The stock price of the large retail store Costco Wholesale (NASDAQ: COST) rose 2.5% or more due to overtime trading on the 2nd. The reason for the increase was that the company announced plans to raise annual fees for the first time since 2017.

Starting 9/1, membership fees in the US and Canada will be raised from $60 to $65. Also, the senior executive membership fee will be raised from $120 to $130 per year.

Investors should note that the company has a track record of increasing membership fees every five and a half years. Since the last price increase was in 2017/6, the company was expected to raise prices again in late 2022 or early 2023. However, due to high consumer concerns about inflation, Costco chose to postpone price increases.

Interestingly, these membership fees are a major source of income for Costco. In 2023, membership fees generated revenue of 4.6 billion dollars, up 8% from the previous year.

Notably, this price increase has affected approximately 52 million members, and more than half of them are executive members. Accordingly, this move is expected to reinforce the company's top-line growth.

In addition to the membership fee increase plan, Costco published an impressive sales report for June.

Existing store sales increased 5.3% in June. This growth was fueled by strong performance in both major markets in the US and Canada.

Overall sales for 2024/6 were 24.4 billion 80 million dollars, up 7.4% from the same month last year.