Outstreched arm

Tuesday, July 19, 2005

Low cost, high CostCo stock

This is beautiful. The New York Times has an article on CostCo, a place you should really consider for your dirt-cheap, medium-to-excellent quality merchandise in American-ass -sized packages, nearly guilt-free. Here's why:

Costco's average pay, for example, is $17 an hour, 42 percent higher than its fiercest rival, Wal-Mart's Sam's Club. And Costco's health plan makes those at many other retailers look Scroogish.
At Costco, one of Sinegal's cardinal rules is that no branded item can be marked up by more than 14 percent, and no private-label item by more than 15 percent. In contrast, supermarkets generally mark up merchandise by 25 percent, and department stores by 50 percent or more.
...when analysts complained that Costco's workers were paying just 4 percent toward their health costs, he raised that percentage only to 8 percent, when the retail average is 25 percent.

Pretty neat, huh? Except!

Emme Kozloff, an analyst at Sanford C. Bernstein & Co., faulted Sinegal as being too generous to employees...

"He has been too benevolent," she said. "He's right that a happy employee is a productive long-term employee, but he could force employees to pick up a little more of the burden."

- HoustonChronicle.com

The article notes that CostCo's stock price has gone up in the past year, while Walmart's has dropped. C'mon, Wall Street, let us have this one dream - that a business can thrive by being good to both the insiders and the outsiders, Machiavelli be damned. Personally, I like CostCo because their prices are often ridiculous, and their merchandise beats any of the major grocery stores around. Check out their selection of cheese, wine, and office supplies. Get two jars of Nutella for $4. You'll save $45 (the annual membership fee) the first three times you shop; the first time if you have a large family.

Edit: This was posted on Fark, where it got accolades from the usually cynical masses.

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