Richard Galanti, Chief Financial Officer at Costco, stated Thursday that the company wants to ensure it has essential products in stores despite shipping delays and shortages of truck drivers making it difficult to keep them on shelves.
During earnings calls, he stated that the retailer has "put some [purchase] limits on key items." These include toilet paper and paper towels, bottled waters, and high-demand cleaning items. He didn't specify how many items customers would be able buy.
This is a different reason than the earlier pandemic phases, which saw stores seeing unusually high demand in paper products and antibacterial wipes due to customers stockpiling those goods.
Galanti stated that a year ago, there was a shortage in merchandise. They now have plenty of merchandise, but it takes two to three weeks for it to be delivered. This is because the short-term delivery and trucking needs of suppliers are limited so it's not all that common.
Analysts had high expectations for Costco's fiscal fourth quarter ended August 29th, but the warehouse chain that is membership-only beat them on Thursday. Galanti, however, stated that the pandemic had impacted Costco's supply chains and raised its costs.
Galanti stated that Costco places earlier orders in order to obtain what it requires. Galanti said that Costco has chartered three ocean vessels to transport containers between Asia, the U.S., and Canada over the next year. He said that each ship can transport 800 to 1000 containers at once.
There were social media posts in August about product limitations on some private-label products. The retailer warned customers this week that delays could occur when placing an order online for toilet paper, a household item that has become synonymous with stockpiling. Fox Business first reported the delay, and it was mentioned in an email confirmation.
Galanti stated that jewelry, home furnishings and sporting goods were in high demand during the last three months. Galanti said that the retailer most known for large and bulky rings "sold a few rings in the $100,000 range."
Costco shares rose less than 1% Thursday evening. The stock gained 20% in the past year to reach $200.16 billion by the close of the market.
