Costco isn’t yet in a position to cut prices even as shipping and commodities prices have fallen, the CFO says
in recent months as the global economic outlook has weakened. The daily freight rate to move a container across the Pacific is now $2,265, compared with $13,706 at the beginning of the year and $20,586 in September of last year, according to the Freightos Baltic Index, an international freight rate reading.
Costco is one of the biggest and most successful retailers in the country. In this video, WSJ’s Sarah Nassauer dissects the wholesaler’s unique approach to doing business. Photo: Qian Weizhong/ZUMA Press It can take anywhere from six months to a year before lower shipping costs translate into falling prices for consumers, said Chuck Grom, a managing director at Gordon Haskett Research Advisors. Higher costs in other business areas can delay price drops even longer.
Hourly employees, which account for about 90% of Costco’s workers, earn more than $25 an hour on average in the U.S., according to Mr. Galanti, following a string of pay increases over the past 18 months. The company looks to attract and retain workers in competitive job markets, such as Seattle, said Mr. Galanti. These cost pressures will persist, as wages don’t tend to come down once they have gone up, Mr. Galanti said. Costco had around 285,000 employees at the end of June.
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