Costco (NYSE: COST) is not like any other major retailer. People have to pay to shop there. Over 136 million people have decided to do so. Last year, membership fees brought in $4.8 billion from its 891 warehouse locations.
There are two primary levels of membership at Costco. One is “Gold” members who pay $65 a year. The other is “Executive” members who pay $130 a year. The “Executive” members receive special privileges, including 2% cash back on their purchases, access to home and car insurance, and travel products. Costco has 38 million “Executive” members.
There is a new reason to be an “Executive” member. You get to go into Costco stores earlier than everyone else. The “Executive” members can enter warehouses from 9 am to 10 am, Sunday through Friday. On Saturdays, the time is from 9:00 a.m. to 9:30 a.m. The other members can access the facility from 10 am on Sundays through Fridays and at 9:30 am on Saturdays.
Costco announced the changes on its website. They took effect on June 30. One of the reasons Costco offered the deal is that it raised its rates. “Executive” members had a $10 increase per year last September. The new level of awards they can earn has increased from $1,000 to $1,250. According to CNN, these members account for 72% of Costco’s revenue.
Costco did not give a reason for the change. However, since “Executive” members account for such a large portion of Costco’s revenue, it makes sense to offer extra benefits that could increase the percentage of “Executive” members among the total.
Costco has done well recently. In the most recently reported quarter, comparable store sales increased 8% year-over-year. Revenue rose from $58.5 billion to $62.3 billion. EPS rose from $3.79 to $4.29. Long-term investors have been rewarded. Over the last five years, the stock has increased by 202%, while the S&P 500 has risen by 98%.
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