ISSAQUAH, Wash. — As commodity prices come down, Costco Wholesale Corp. here said Wednesday it will lower prices accordingly on supermarket-related items.
“We have been the leader in terms of keeping prices down despite very upward increases and underlying costs, so as those [prices] come down, it gives us margin relief," said Richard A. Galanti, executive vice president and chief financial officer. "But generally speaking, across what I’ll call the supermarket canned and boxed categories, we’re going to try to lower prices. Being aggressive is in our blood.
"We kept our prices down when underlying raw material costs skyrocketed, and now they’re coming back [down], and hopefully that will give us a fairer margin in some areas where we have really hit ourselves hard. But we’re going to keep doing what we’re doing in terms of being aggressive. And while we certainly aren’t cavalier about our competition, we think our toughest competitor is ourselves, and we’re going to keep driving that.”
Galanti’s remarks came during a conference call with analysts to discuss financial results for the 16-week fourth quarter and 52-week fiscal year ended Sept. 1, which compared with a 17-week quarter and 53-week year in the previous periods.
Net income for the quarter rose 1.3% to $617 million, while sales increased 0.8% to $31.8 billion and comparable store sales climbed 5% overall, including 5% in the U.S. and 4% outside the U.S
For the year net income was up 19.3% to $2 billion, while sales rose 6% to $102.9 billion and comps increased 6% overall, including 6% in both the U.S. and international markets.
Galanti said Costco plans to ramp up expansion in fiscal 2014, with plans for 36 new warehouses — including its first two locations in Spain — compared with 26 new units in fiscal 2013 and 16 the year before, with capital expenses between $2.3 million and $2.5 million, compared with $2.1 million last year. Besides the two warehouse in Spain, the company expects to open 18 in the U.S.; five in Australia; four in Korean, three in Japan, three in Canada and one in Mexico.
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