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Is Your Amazon Prime Membership Hurting Costco Wholesale Corporation? (COST)

Costco Wholesale Corporation (COST) and Sam's Club are undoubtedly already weary of mega-retailer Amazon.com (AMZN), but a recent investment note suggests those concerns are indeed well-founded, reports Business Insider.

U.S. households exclusively with Prime memberships have grown two-fold the last four years (up to 16.2 percent this year from 7.1 percent in 2013), while those with just Costco slid from 14.9 percent to 9.8 percent, according to a recent Cowen & Co. note. Sam's Club, which is owned by Wal-Mart Stores ( WMT), dipped 7.2 percentage points.

What's more: Households with Prime and Costco memberships ticked up to 11.3 percent the last four years, up from 4.8 percent. Prime and Sam's Club saw a similar jump, climbing 3.7 percentage points to 8.5 percent. Cowen & Co. says these numbers show that either Amazon Prime is gaining a stronger hold on Costco and Sam's Club members or bringing in new customers to the warehouse membership market.

COST shares have improved since a 15 percent dip back in May, though it's still struggled in the market. While it enjoyed highs like a third-quarter earnings beat where its same-store sales bested Sam's Club, its Visa-branded ( V) card transition hasn't gone as smooth.

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And if Cowen & Co.'s note is fortuitous, Costco's problems could only continue. "The risk is that as Amazon continues to improve Prime's value proposition and add more layers to the Prime service, US households could cancel subscriptions for one or both of the Warehouse clubs. At a minimum, the number of consumers opting to just use Costco and/or Sam's Club 'Only' is likely to continue to decline," according to Cowen's note.

This month Costco shares are down 10 percent following just a 2 percent fourth-quarter sales uptick. All eyes will be on the retailer when it reports earnings Thursday after market close.

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