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Costco's Membership Fees Rise 14%: Sustainable Growth or Peak?

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Key Takeaways

  • Costco's membership fee income rose 14% to $1,724M in Q4, with most gains from new sign-ups and upgrades.
  • Executive memberships grew 9.3% to 38.7M, now driving nearly three-quarters of global sales.
  • Renewal rates eased slightly as more digital and younger members joined through promotions like Groupon.

Costco Wholesale Corporation (COST - Free Report) reported a 14% year-over-year increase in membership fee income during the fourth quarter of fiscal 2025, reaching $1,724 million. Adjusted for currency, the growth was 13.6%. The September 2024 membership fee increase in the United States and Canada contributed to less than half of the quarterly growth, highlighting that most of the rise came from new sign-ups and member upgrades. Excluding the membership fee increase and foreign exchange effects, membership income grew 7% from the same period last year.

Paid memberships ended the fiscal year at 81 million, up 6.3%, with executive memberships climbing 9.3% to 38.7 million. Executive memberships now account for 47.7% of paid members and 74.2% of worldwide sales. 

Renewal rates remain high at 92.3% in the United States and Canada and 89.8% globally, but both figures slipped modestly. Management attributed the decline to a greater share of digital sign-ups, including promotional campaigns such as the large Groupon initiative. Younger and digitally acquired members renew at slightly lower rates, creating some pressure on the metrics even as overall membership revenue expands. Younger members now account for nearly half of new sign-ups.

The company is countering this challenge through auto-renewal features, more targeted digital communication, and new perks such as extended warehouse hours and a $10 monthly credit on Instacart purchases for executive members. These benefits have already fueled stronger upgrade activity. The fee increase, coupled with broadening membership appeal, signals ongoing strength. However, the sustainability of double-digit fee growth hinges on balancing new member acquisition with retention stability.

Walmart & BJ’s Wholesale Snapshot on Membership Income

Walmart Inc. (WMT - Free Report) is leaning heavily into membership economics as Walmart+ and Sam’s Club continue to deliver outsized growth. In the second quarter of fiscal 2026, Walmart reported a 15.3% surge in global membership fee income, outpacing overall sales growth. Walmart+ delivered double-digit growth in fee income, while Sam’s Club posted a 7.6% rise fueled by higher Plus member penetration. Management emphasized that Walmart’s membership strength is now a critical profit lever alongside advertising and e-commerce, giving Walmart the flexibility to offset rising costs and reinforce its price leadership.

BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) is also showing notable traction in membership fees, supported by its digital ecosystem. BJ’s Wholesale posted record membership income of $123.3 million in the second quarter of fiscal 2025, up 9% from last year, with total membership reaching 8 million. BJ’s Wholesale noted that digitally engaged members are twice as valuable as in-club-only shoppers, underscoring how technology integration and higher-tier penetration, now at 41%, are fueling loyalty and retention.

What the Latest Metrics Say About Costco

Costco stock has risen 4.8% over the past year, underperforming the industry’s growth of 6.3%.
 

Zacks Investment Research
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From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 45.34, higher than the industry’s ratio of 29.49. COST carries a Value Score of D.
 

Zacks Investment Research
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The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 7.8% and 11.2%, respectively. 
 

Zacks Investment Research
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Costco currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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