Costco Wholesale (NASDAQ:COST), a department store that runs membership-only outlets across the U.S. and beyond, has found a way to break the chain of membership card sharing. The company has said that it will start checking the IDs of members at the self-checkout stations that have become popular lately as it saves time. If a member’s card does not have a photo, he/she will be asked to show a photo ID card as well, the company added.
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Costco already checks members’ IDs at the check-in spot and the cash registers. With the added scrutiny at self-checkout, COST hopes to break the chain of card sharing. Costco charges $60 for a regular annual membership, in which you can be accompanied by one more member of your family, and $120 for a premium membership with added advantages. The company believes that the benefits and lower pricing that come with memberships should not be passed on to non-members. The company earns huge dollars from membership fees, which amounted to $4.07 billion for the trailing twelve-month period. According to the company, these fees contribute to covering the company’s general expenses and maintaining affordable prices for the items.
Why Costco Decided to Crackdown on Membership Sharing
The company has noticed a rise in the number of card-sharing cases after expanding the self-checkout facility at more stores. Due to the combined impact of the pandemic and inflation, people are turning to discount department stores in order to save money. Even so, the department chain is feeling the pinch of the tough macro background as customers prefer to delay purchases of premium merchandise and stick to essential items only. By stopping membership card sharing, Costco can at least compel a few, if not all, customers who have become accustomed to the stores’ items and pricing to buy its membership.
The company is following in the footsteps of other companies facing the same issue. Streaming platform Netflix (NASDAQ:NFLX) recently cracked down on the password-sharing racket in the U.S. by allowing account sharing only between users of the same household. Surprisingly, the company experienced a massive spike in registrations in the days following the crackdown. Costco currently has 124.7 million cardholders across 69.1 million households worldwide.
Is COST Stock a Good Buy?
On June 26, Gordon Haskett analyst Charles Grom lifted the price target on COST stock to $575 (8.4% upside) from $550 and reiterated a Buy rating. Further, out of the 16 top analysts who recently rated COST, 12 have given it a Buy rating and four have given it a Hold rating. As per the top analysts, Costco is a Strong Buy rated stock. COST stock has gained 17.5% so far this year.
Top Wall Street analysts are those awarded higher stars by TipRanks Star Ranking System. This is based on an analyst’s success rate, average return per rating, and statistical significance (number of ratings). Based on the top analyst ratings, the average Costco Wholesale stock prediction of $551.93 implies 4.1% upside potential from current levels.
