Membership fee rise fails to soothe investors, shares fall

Costco shares tumbled on Friday and sustained the biggest intraday decline since December 2015.

A membership fee increase announced Thursday also failed to placate investors. The company plans to boost its rates by $5 this year, a move that should help fuel sales and earnings. As of June 1, its annual fees will climb to $60 for Goldstar and business members, Costco said. Its executive memberships will rise $10 to $120.

The warehouse-club chain counts on the money for about 70 percent of operating income, and increases are closely watched by analysts and investors. The changes will affect about 35 million members.

The shares had climbed 11 percent this year through Thursday’s close. Costco’s stock had been riding high after January sales that beat analysts’ estimates by more than twofold.

Shares closed down $7.72, or 4.34 percent, at 170.26 on Friday, according to Google finance.

The results — coming from a company that’s widely seen as a retail bright spot — renew concerns about the industry. Best Buy Co. and Target Corp. both offered pessimistic outlooks this week, dragging down shares of the big-box retailers.

Costco reported revenue of $29.8 billion in the second quarter, which ended Feb. 12. Analysts had predicted $29.9 billion. Same-store sales, excluding gas and currency changes, rose 3 percent. The growth was 2 percent on that basis in February, Costco said. Analysts had estimated 2.9 percent.

Earnings were $1.17 a share in the COSTCO,