Walmart's Membership Fees Jump 17%: Can They Boost Profits?

Walmart Inc. WMT delivered a solid contribution from its membership business in the third quarter of fiscal 2026 as membership income increased 17% year over year, reinforcing the growing importance of fee-based revenues within the company’s operating model. Membership and other income rose 9% overall during the quarter, reflecting steady momentum across multiple regions and formats.

The increase was driven by strength across Walmart’s platforms. International membership income climbed 34%, led primarily by Sam’s Club China, where member engagement and penetration continued to expand. In the United States, Walmart Plus membership income grew at a double-digit rate, supported by strong net additions and improved service offerings. Sam’s Club U.S. also posted membership income growth of 7%, aided by gains in member counts, renewal rates and Plus member participation.

Management highlighted that membership fees, combined with advertising income, accounted for roughly one-third of consolidated adjusted operating income in the quarter. This underscores the higher margin profile of these revenue streams compared with traditional merchandise sales, particularly at a time when grocery and health-related categories continue to weigh on the overall mix.

Walmart Plus recorded its strongest quarter of net additions since the program launched. Growth was supported by faster delivery speeds, higher service levels and the rollout of new benefits such as the OnePay cash rewards credit card and expanded streaming options. These enhancements helped drive member engagement and retention during the period. 

Overall, the 17% rise in membership income highlights Walmart’s increasing reliance on recurring fee revenues as a meaningful contributor to profitability, even as mix pressures persist elsewhere in the business.

How TGT & COST Leverage Membership Fees to Support Profits

Target Corporation TGT is increasingly leaning on fee-based and non-merchandise revenues as a profit support lever. In the third quarter, Target reported nearly 18% growth in non-merchandise sales, with membership, Roundel advertising and marketplace revenues all rising at double-digit rates. TGT highlighted that these higher-margin income streams helped offset softer discretionary demand. For Target, expanding membership-related income remains an important buffer to merchandise mix pressure.

Costco Wholesale Corporation COST continues to demonstrate the earnings power of its membership model. In the first quarter of fiscal 2026, Costco reported membership fee income of $1.329 billion, up 14% year over year. COST ended the quarter with 81.4 million paid members and 39.7 million paid Executive memberships, both showing solid growth. For Costco, recurring membership fees remain a central driver of profitability.

The Zacks Consensus Estimate for Walmart’s current fiscal year sales and earnings per share implies year-over-year growth of 4.6% and 4.8%, respectively.

What Key Metrics Say About Walmart

Walmart has seen its shares rally 23.9% in the past year compared with the industry’s growth of 23.5%. 

From a valuation standpoint, Walmart's forward 12-month price-to-earnings ratio stands at 38.45, higher than the industry’s 35.09.

The Zacks Consensus Estimate for Walmart’s current fiscal year sales and earnings per share implies year-over-year growth of 4.6% and 4.8%, respectively.
 
Walmart currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

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

Zacks Investment Research