Published: Sat, March 04, 2017
Economy | By Melissa Porter

Costco to cost more: Member fees are going up this summer

That was up 5.7 percent from the same quarter a year ago. For the four-week reporting month of February, which ended Feb. 26, the company reported net sales of $8.92 billion, an increase of 8 percent from $8.28 billion during the similar four-week period previous year. In Q2, Costco's membership revenue grew 5.5% y-o-y to $636 million.

The club retailer said Thursday that effective June 1, the price of entry into its USA and Canada stores will be $60 for individual and business cardholders, an increase of $5.

Executive membership fees will also rise by $10 to $120.

Costco's total same-store sales rose 3 percent in the second quarter ended February 12, excluding the impact of changes in gasoline prices and foreign exchange. The company's comparable sales saw solid growth in the USA and Canada, but fell in worldwide markets. The remaining revenue comes from the worldwide business that saw comps decline by 2% for the quarter.

The increases will go into effect on June first. Systemwide, comparable sales were up 3%, with the core USA market matching the overall figure.

The stock showed weekly upbeat performance of 2.12%, which was maintained for the month at 5.47%. Investors who are keeping close eye on the stock of EOG Resources, Inc.

The company completed the switch to Visa from American Express Co during the fourth quarter a year ago.

Costco operates 728 warehouses, comprising 508 warehouses in the USA and Puerto Rico, 94 in Canada, 37 in Mexico, 28 in the United Kingdom, 25 in Japan, 13 in Korea, 13 in Taiwan, 8 in Australia, and 2 in Spain. After-tax net income of $515 million (down 5.7% year over year) failed to meet expectations due to rising costs. Presently, it has a Return on Equity (ROE) of 20.70% and Return on Investment (ROI) of 13.80%. This rapid inventory turnover enables Costco to operate profitably at significantly lower gross margins than traditional wholesalers, discount retailers and supermarkets. A differentiated product range enables the company to ensure an upscale shopping experience for its members, resulting in market share gains. Also, insider David S. Petterson sold 700 shares of Costco Wholesale Corporation stock in a transaction dated Wednesday, December 28th. It is also gradually expanding its eCommerce capabilities in the U.S., Canada, the UK, Mexico, Korea and Taiwan. The move brings Costco's total store count to 728. Most recently, the company reported EPS of $1.17. The stock has gained consensus mean rating of Overweight based on the analysis of brokerage analyst firms polled. They set a "positive" rating and a $195.00 price target for the company. Meats, such as bacon and chicken breasts, are often great buys at warehouse clubs (freeze whatever you don't use), as are some kitchen appliances, but books, compact discs, and DVDs are often cheaper online; and condiments and perishables will obviously spoil if you don't use them early.

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