Breaking News
0

Costco and BJ's Wholesale Consumers 'Willing to Pay More' - Jefferies

Stock Markets Jun 16, 2022 14:38
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters.
 
COST
-1.20%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
BJ
-2.98%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

Jefferies analyst Corey Tarlowe told investors in a note that the impact of potential membership fee increases for Costco (NASDAQ:COST) and BJ's Wholesale (BJ) could provide a low-single-digit to mid-single-digit percentage lift to its F'23 and F'24 EPS estimates.

Tarlowe reiterated a Buy-rating on both companies and said their survey data suggests there is an opportunity to raise membership prices.

"In our recent survey of 900+ warehouse club members, ~60% of respondents indicated a willingness to pay more (between $10 and $30+) for their BJ membership (vs. ~40% in LY's survey)," the analyst wrote. "Club retailers provide a strong value proposition to their customers, that this value proposition continues to be improved, and that consumers are willing to pay more for this offering. We believe this suggests an opportunity for COST and BJ to raise membership prices."

Costco recently indicated that now is not the right time to raise membership prices, and the company, according to Tarlowe, typically raises its membership fee every 5 and a half years. With the last price increase in June 2017, Jefferies believes a price increase could come in the next year.

Meanwhile, the Jefferies analyst said BJ's generally keeps its membership fee similar to Costco's, with the latest increase coming at the start of 2018.

"Based on our analysis, we believe that a price increase in line with the historical average in the U.S. and Canada could generate a low-single digit percentage lift to our F'23 and F'24 EPS estimates for COST, assuming the increase occurs November 1st, 2022. For BJ, we believe a price increase in line with the historical average could generate a low-single digit to percentage lift to our F'23 EPS estimate and a mid-single digit percent lift to our F'24 EPS estimate, assuming the increase occurs January 1st, 2023."

By Sam Boughedda

Costco and BJ's Wholesale Consumers 'Willing to Pay More' - Jefferies
 

Related Articles

Mizuho Cuts Price Target on Tesla
Mizuho Cuts Price Target on Tesla By Investing.com - Oct 06, 2022

By Michael Elkins Mizuho Securities reiterated a Buy rating on Tesla (NASDAQ:TSLA) and lowered the price target to $370.00 (from 391.67) following the release of the electric...

Credit Suisse Shares Rise After JPMorgan Upgrade
Credit Suisse Shares Rise After JPMorgan Upgrade By Investing.com - Oct 06, 2022

By Scott Kanowsky  Investing.com -- Shares in Credit Suisse Group AG (SIX:CSGN) rose in European trading on Thursday after JPMorgan analysts upgraded their rating of the...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email