Originally posted by: fbrdphreak
That is cool, didn't know that about Costco (don't have any around here).
:thumbsup: for a company with what appears to be good ideals
Originally posted by: rahvin
Originally posted by: kranky
I truly believe that a place like Wal-Mart could double their salaries and still not spend more in total. Offer a livable, attractive wage, and you will get people who work hard because they want to keep that job. Double the wages, and you could get it done with half the workers. Net effect = same cost.
Costco is the only place that's figured it out?
It's no wonder that places that pay minimum wage can't keep anyone. Why should anyone stay if they don't like it, when they can get a job that pays the same in two hours? There are so many openings for minimum wage jobs, you could quit after a week for a whole year and still find places that would hire you.
The problem is that wall-street and the analysts in particular are only interested in quarter to quarter results. As an example last quarter Costco missed their estimate, they missed it because gas prices had fluctuated radically and they ended up not making as much as they had hoped per gallon. The analyst in the conference call asked them why they didn't just raise prices on the gas across the board and weather the erratic prices with just higher prices in general. That is the mentality Costco will always deal with because they aren't interested in next quarters numbers, they are interested in long term growth and frankly in the long run owning a stock that is what you want. Costco gets beat up because they don't play the day trading game, but you watch, as they expand across the rest of the country the long term gains on their stock will outpace walmart 10 fold.
Originally posted by: Orsorum
Originally posted by: rahvin
Originally posted by: kranky
I truly believe that a place like Wal-Mart could double their salaries and still not spend more in total. Offer a livable, attractive wage, and you will get people who work hard because they want to keep that job. Double the wages, and you could get it done with half the workers. Net effect = same cost.
Costco is the only place that's figured it out?
It's no wonder that places that pay minimum wage can't keep anyone. Why should anyone stay if they don't like it, when they can get a job that pays the same in two hours? There are so many openings for minimum wage jobs, you could quit after a week for a whole year and still find places that would hire you.
The problem is that wall-street and the analysts in particular are only interested in quarter to quarter results. As an example last quarter Costco missed their estimate, they missed it because gas prices had fluctuated radically and they ended up not making as much as they had hoped per gallon. The analyst in the conference call asked them why they didn't just raise prices on the gas across the board and weather the erratic prices with just higher prices in general. That is the mentality Costco will always deal with because they aren't interested in next quarters numbers, they are interested in long term growth and frankly in the long run owning a stock that is what you want. Costco gets beat up because they don't play the day trading game, but you watch, as they expand across the rest of the country the long term gains on their stock will outpace walmart 10 fold.
Agreed.
I did a relatively in-depth analysis of Costco for one of my financial statement analysis courses in acctg undergrad, I was impressed (but not surprised) with the numbers I saw. Costco will live to see the long-run. Wal-Mart will not unless they change their corporate culture and their business model.
Originally posted by: yellowfiero
ISSAQUAH, WASH. - Jim Sinegal, the chief executive of Costco Wholesale, the nation's fifth-largest retailer, crows about Costco's private-label pinpoint cotton dress shirts.
"Look, these are just $12.99," he said while lifting a crisp blue button-down inside Costco's cavernous warehouse store here in the company's hometown. "At Nordstrom or Macy's, this is a $45, $50 shirt."
Combining high quality with stunningly low prices, the shirts appeal to upscale customers ? and epitomize why some retail analysts say Sinegal just might be America's shrewdest merchant since Sam Walton, the founder of Wal-Mart.
But not everyone is happy with Costco's business strategy. Some Wall Street analysts assert that Sinegal is overly generous not only to Costco's customers but to its workers as well.
Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Wal-Mart's Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish. One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."
Sinegal begs to differ. He rejects Wall Street's assumption that to succeed in discount retailing, companies must pay poorly and skimp on benefits, or must ratchet up prices to meet Wall Street's profit demands.
Good wages and benefits are why Costco has extremely low rates of turnover and theft by employees, he said. And Costco's customers, who are more affluent than other warehouse store shoppers, stay loyal because they like the fact that low prices do not come at the workers' expense.
"This is not altruistic," he said. "This is good business."
He also dismisses calls to increase Costco's product markups. Sinegal, who has been in the retailing business for more than a half-century, said that heeding Wall Street's advice to raise some prices would bring Costco's downfall.
"When I started, Sears, Roebuck was the Costco of the country, but they allowed someone else to come in under them," he said. "We don't want to be one of the casualties."
At Costco, one of Sinegal's cardinal rules is that no branded item can be marked up by more than 14 percent, and no private-label item by more than 15 percent. In contrast, supermarkets generally mark up merchandise by 25 percent, and department stores by 50 percent or more.
"They could probably get more money for a lot of items they sell," said Ed Weller, a retailing analyst at ThinkEquity.
But Sinegal warned that if Costco increased markups to 16 percent or 18 percent, the company might slip down a dangerous slope and lose discipline in minimizing costs and prices.
Sinegal, whose father was a coal miner and steelworker, gave a simple explanation.
"On Wall Street, they're in the business of making money between now and next Thursday," he said. "I don't say that with any bitterness, but we can't take that view. We want to build a company that will still be here 50 and 60 years from now."http://www.chron.com/cs/CDA/ssistory.mpl/business/3268811
Originally posted by: RossMAN
CostCo rocks and definitely carries the RossMAN Seal of Approval
Originally posted by: Tiamat
~ 50 years business experience >>> txt book financial analyst.