“Costco Reluctantly Searches the Web for Younger Shoppers” by Kyle Stock at Businessweek. “We’re open-minded, but don’t expect us to go to everybody’s doorstep,” Galanti said. “Delivering small quantities of stuff to homes is not free. Ultimately, somebody’s got to pay for it.” Read more
“Home Depot reviews policies as open carry gun rally at Texas store nears” by Carla Caldwell at Atlanta Bus. Chronicle. “Home Depot is reviewing its policies as more than 150 open carry gun enthusiasts plan to gather Saturday at a store in Texas, reports Forbes…Forbes reports Holmes later called to say Home Depot is determining whether the rally goes against the Atlanta-based company’s non-solicitation policy. “We don’t allow any group or any individual to disrupt a store’s business,” he said.” Read more
“Protest: Bee supporters to protest at Lowe’s shareholder meeting (with giant inflatable bee!) “ by Ely Portillo at Charlotte Observer. “Beekeepers and advocates plan to protest Mooresville-based Lowe’s, Inc.’s annual shareholder meeting Friday, pressuring the home improvement retailer to stop selling pesticides they say harm bees…The protest, scheduled to precede the 10 a.m. shareholder meeting at the Ballantyne Hotel & Lodge, is set to feature beekeepers and a giant inflatable bee.” Read more
“More supplier brands dabbling in retail ventures” by Kim Souza at The City Wire. “Apple does it better than anyone, but McCormick, Hershey, Jockey & Choboni are among supplier brands gleaning new insights through retail ventures.” Read more
“Sam’s Club Puts Cash Rewards in Member’s Wallets” “Sam’s Club announced the national rollout of Cash Rewards, a new program that provides $10 in Cash Rewards for every $500 spent on qualifying pre-tax purchases. Beginning June 12, Sam’s Club Plus members will automatically be enrolled to start earning up to $500 in Cash Rewards annually, an industry-leading benefit among warehouse clubs.” Read the release
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“Fred’s Q1 Comp Sales Down 1.9%” “The front end of our stores will be re-laid with power displays and pallets, along with a faster check-out configuration, all focused on ease of shopping and designed to emphasize the advantages of shopping at Fred’s 15,000-square-foot box.” Read the release
“Census Bureau: Online Shopping and Mail Order Businesses Jump 27%” “Employment climbed 13.7 percent to 365,508. In contrast, for the retail trade sector as a whole, which includes traditional “brick and mortar” stores, the number of establishments rose just 0.1 percent, while employment climbed 0.7 percent.” Read the release
“Heard on the Call” – Highlights from Costco’s Q3 Earnings Call
Richard Galanti – CFO
After opening 60 new locations in the first half of fiscal 2014…We opened four new locations in Q3, two in the U.S., one in Louisiana and one in Texas and one each in Japan and Korea.
This week we are opening our sixth location in Australia in Brisbane, our 11th Korea location and our 20th Costco in Japan, so three openings outside of the U.S. this week.
By weekend, we will be operating 657 locations worldwide and after that and through the end of the fiscal 2014 on August 31st we expect to open six more locations, four in the U.S. and one each Canada and U.K…663 Costco’s worldwide as of August 31st.
Within the U.S., Southeast and Midwest were the strongest in the high single digits.
Sales results by category
Food and sundries, overall in the mid single digits.
Frozen food, candy and meat, deli were relative standouts.
Hardlines, which overall was just above flat, about a 0.5% up, departments with the strongest results were office and automotive, consumer electronics sales were down in the low to mid singles.
Within the mid to high single-digit softline comps, small electrics, domestics and apparel were standouts.
In fresh foods, comp sales were up 8% with produce and meat being strongest, although, inflation on the meat side.
Continue to operate Costco Online in the four countries that I’ve mentioned in prior quarter, U.S., Canada, U.K. and Mexico, U.K and Mexico.
Q3 sales and profits are up, sales were up 15% year-over-year in the quarter.
What are members asking for online
I think the areas that we’ve grown over the last year relative to prior to that have been some limited apparel items.
Health and beauty aid items and perhaps another replenishable office items, K-Cups, health and beauty aids, some small office needs.
We are looking to see how we can get items (online) that are more regular and frequent to get people to return to costco.com and I think we are doing better.
Costco home delivery
I don’t think we are ever going to get your one box of Life Cereal and one box of Fruity Pebbles and two different types of half gallons of milk deliver to your doorstep at six in the morning. But there is a lot of things that we have.
Not everybody wants to just sit home and type in stuff to have it delivered in the morning, people like to go out and do stuff.
Don’t expect us to deliver to everybody’s doorstep. If others want to, we will be happy to accommodate and help them do that with our stuff.
On holding down prices: We don’t sit down and kind of optimize everything. We are merchants. There are key price points and that’s how we do it.
Gas: a $12 billion or $13 billion business for us.
Organic: The challenge is the supply, frankly. There is not enough supply but if we can show great value, we will figure it out.
Organic fresh ground beef: And to our pleasant surprise, 75%, 80% of these sales in this new item was truly incremental.
New store in Spain: So far so good. We only were there for two weeks. We’ve had good sign-ups, not like Japan and Korea but very, very good in our mind.
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