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On a day when Federal Reserve Chairman Jerome Powell signaled that inflation could burst with the reopening of the US economy, Costco said he is also seeing his own food inflation; in bacon.
| Ticker | Safety | Last | Change | Change % |
|---|---|---|---|---|
| COST | COSTCO WHOLESALE CORP. | 319.04 | -4.88 | -1.51% |
“Bacon is up 45% in pounds, for whatever reason, there is a lot of demand there, so there is a small challenge,” said CFO Richard Galanti during a conference call with investors.
Galanti, who is able to explain Costco’s successes and mistakes in simple language, stimulated the inflationary increase. “Some categories are in the range of 2 to 4%, some like meat and pork slightly above that, production is flat,” he detailed in response to a question. However, overall inflation is stable at up to 1-1.5%, he clarified.
It is not clear whether the higher meat and pork costs will be passed on to consumers.
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There are a number of factors pushing pork prices up, as reported by Farm Journal’s Pork, including herd losses for U.S. pigs linked to “swine reproductive and respiratory syndrome (PRRS) here – especially in Minnesota and Iowa”, in addition to plague African swine harming pigs.
As for broad American inflation, it remains below the Fed’s preferred 2% level, but shows signs of an increase in items such as energy. Oil prices reached the level of $ 63.83 per barrel on Thursday, the highest level since April 2019, as monitored by the Dow Jones Market Data Group. Meteorologists are now predicting that this could hit pump prices in the coming weeks.
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As for the second quarter results, the warehouse retailer posted earnings per share of $ 2.14, below the $ 2.45 expected by analysts surveyed by Refinitiv. The company noted higher costs related to “COVID-19 award wages” for the impact. Revenue was US $ 44.77 billion, 14.5% higher than the US $ 39 billion obtained in the same period of the previous year. E-commerce sales in the quarter increased by 75.8%.
COSTCO BOOSTING MIN. WAGE FOR $ 16 PER HOUR
Last week, when testifying before Congress, CEO Craig Jelinek announced that his workers would receive a raise.
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“Since the beginning of Costco, the company has been committed to paying employees very competitive retail wages and providing them with comprehensive and affordable health benefits,” said Jelinek. “Two years ago, we changed our starting hourly wage to $ 15 across the United States. Starting next week, the starting wage will be $ 16,” he said.
Costco’s shares fell 15% year-to-date.