Costco Membership Fees Surge in 2025: What Investors Should Track Next

Costco Wholesale Corporation COST concluded fiscal 2025 on an upbeat note, with membership fee income rising 14% to $1,724 million in the fourth quarter, marking one of the solid increases in recent times. This growth was driven by an expanded membership base, increased upgrades from Gold Star to Executive membership, and a rise in membership fees implemented in the United States and Canada in September last year. The fee increases accounted for slightly less than half of the total membership fee income growth.

Excluding the fee hike and FX effects, membership income still increased 7%, reflecting continued organic strength. Paid memberships climbed 6.3% to 81 million during the quarter. Executive members grew 9.3% to 38.7 million, now accounting for nearly 47.7% of total paid members and 74.2% of global sales.

The key question is whether this 14% increase in membership fee income indicates a sustainable trend. Costco experienced a minor setback, with the worldwide renewal rate easing to 89.8% from 90.2% in the preceding quarter. The renewal rate in the United States and Canada fell 40 basis points sequentially to 92.3%. Management attributed this decline to a higher proportion of online sign-ups, including promotional activity such as the large Groupon campaign.

To address this, the company is promoting auto-renewal, enhancing targeted digital communication, and adding new member benefits such as extended warehouse hours and a $10 monthly Instacart credit for Executive members. Younger members now comprise nearly half of new sign-ups. The focus now is on improving the renewal rate among this newer group. We anticipate membership fees to increase 9.1% in fiscal 2026, following 10.3% growth registered in fiscal 2025.

Competitor Membership Momentum: BJ's Wholesale & Walmart

Both BJ's Wholesale Club Holdings, Inc. BJ and Walmart Inc. WMT are demonstrating strong momentum in membership engagement, reflecting the sustained value of the warehouse club model.

BJ's Wholesale membership fee income increased 9.8% year over year to $126.3 million during the third quarter of fiscal 2025. This growth in membership fee income highlights the increasing loyalty and quality of the BJ's Wholesale member base. BJ’s members who are more digitally active and tap multiple services are found to deliver higher lifetime value. Digitally enabled comparable sales rose 30% during the quarter.

Meanwhile, retail giant Walmart reported 16.7% growth in global membership fee income during the third quarter of fiscal 2026. The fact that Walmart saw such substantial growth underscores the continuing consumer demand for the warehouse model's value proposition. In the U.S. market, Walmart+ registered double-digit growth in membership income, whereas Sam’s Club reported an increase of 7%.

What the Latest Metrics Say About Costco

Costco stock has declined 6.5% over the past year against the industry’s growth of 1%.
 

From a valuation standpoint, Costco's forward 12-month price-to-earnings ratio stands at 44.10, higher than the industry’s ratio of 29.77. COST carries a Value Score of D.
 

The Zacks Consensus Estimate for Costco’s current financial-year sales and earnings per share implies year-over-year growth of 7.7% and 11%, respectively. 
 

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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This article originally published on Zacks Investment Research (zacks.com).

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