Costco Delays Inflation Pass-Throughs

ISSAQUAH, Wash. — Costco Wholesale Corp. here plans to hold the line on inflationary price increases for as long as possible before passing them along, Richard Galanti, executive vice president and chief financial officer, said here Wednesday.

ISSAQUAH, Wash. — Costco Wholesale Corp. [4] here plans to hold the line on inflationary price increases for as long as possible before passing them along, Richard Galanti, executive vice president and chief financial officer, said here Wednesday.

The company takes advantage of every forward-buy opportunity manufacturers offer when a price increase occurs, he said, “as we assume many retailers do. But then we probably hold the price longer than anybody else. "We tend to be the strictest and try to hold it a little bit when we can, especially given that we have some relatively strong margin improvements in other areas.

“We realize a lower margin for several weeks or a few months and then, finally, bring the price up to the next level and get back to the regular margins, and once we get there, we're fine.”

Galanti made his remarks during a conference call with analysts to discuss financial results for the second quarter and first half, which ended Feb. 13.

Net income for the 12-week quarter increased 16.4% to $348 million, while sales climbed 11.4% to $20.5 billion, and comparable sales, excluding gasoline, rose 4% overall (3% in the U.S. and 8% outside the U.S.). For the 24-week half, net income was up 16.8% to $660 million, with sales rising 11.3% to $39.3 billion and overall comps increasing 5%, including a 3% comp in the U.S. and a 9% comp elsewhere.