Walmart is set to hike the membership fee to its club store, Sam’s Club.
The company announced on Wednesday that it would be raising the annual fees for both membership tiers of Sam’s Club retailer, effective October 17th. Club membership annual fees will rise from $45 to $50, and Plus club members will see their annual fees rise from $100 to $110.
The price hikes are being introduced as the club rolls out new brands, invests in additional technologies, and makes improvements inside its 600 stores. The company has also implemented a new rewards program as well.
President and CEO of Sam’s Club, Kath McLay, noted in a letter to Sam’s Club members that he was aware of the increasing pressures inflation is applying to customers, saying, “We are mindful of the financial pressure on wallets right now.”
Because of that the company will offer $5 in Sam’s Club cash to Club members, and $10 to Plus members, to ease the burden for the first year.
By way of comparison, a basic membership at Costco costs $60, and an upgraded Gold membership costs $120. However Costco has historically raised its membership every five years, and the last time it raised its membership fees was in 2017.
Walmart executives have noted as inflation has risen, members have begun trading down.
Walmart CFO John David Rainey, in an interview following the company’s latest earnings report this month said, “I’d say that what we’re seeing is [consumers] are still relatively healthy. We’ve seen some changes in consumer behavior that I put in three categories. One is there’s a trade down in both quality and quantity. So instead of buying deli meats, we’re seeing things like canned tuna and chicken and even beans, as units were up over 25% in the quarter. They’re buying smaller pack sizes to save money. We’ve seen an increase in the private brands growth effect, it’s 2x for food what it was in the first quarter.”
However Walmart’s most recent earnings report had several positive points to focus on. In both the US division and Sam’s Club stores, same-store sales surged higher than expected. Full year guidance for profits was also revised up, from a decline of 11%-13%, to 9% to 11%.
Shares in Walmart were flat on Wednesday after the news. So far this year Walmart has been down 8%, vs a 16% decline for the broader S&P 500.
