Costco may raise its membership fees, UBS says

A customer pushes a cart of outdoor items past a membership desk at a Costco Wholesale Corp. store in Naperville, Illinois.
Daniel Acker | Bloomberg | Getty Images

Membership fees at Costco could be going up soon as the buy-in-bulk retailer capitalizes on momentum in membership renewals and new signups, according to analysts at UBS, who reiterated a buy rating on the company.

"Looking ahead, we continue to believe a fee hike is most likely to occur next Q, though there's a chance it could happen alongside its 2Q results," equity analyst Michael Lasser wrote in a research note on Monday. "Considering fees have historically accounted for ~75% of its EBIT [profit before interest and taxes], any increase would likely help support further upward momentum for its shares."

UBS' analysis was released ahead of Costco's quarterly results, which are scheduled to come out on Thursday after the market close.

"Traffic growth was impressive in late November, December, and January, which likely supported new membership signups and renewals," Lasser said.

UBS says next quarter the basic membership fee could rise by $5 to $60, while the executive membership could increase by $10 to $120, implying a 9 percent jump in membership fees for each offering.

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