Costco Gets Whacked by Inflation
by Wolf Richter
WolfStreet.com
Mar 2, 2017
Costs went up faster than sales; now its high-flying stock is tanking
Limited, steady inflation is the best thing since sliced bread, so to speak, for over-indebted companies, governments, and for debt-slave consumers – if wages rise faster than inflation, which they haven’t done in years. But it’s a vicious parasite for companies that cannot fully pass on their inflated input costs to the consumer. Sales rise due to inflation without having to sell a single extra thing, and analysts love that. But costs go up too, and at Costco, they went up faster than sales, and now its high-flying stock is tanking.
Costco, the second largest US retailer after Wal-Mart with 728 stores in nine countries, including 508 in the US and Puerto Rico and 94 in Canada, was considered one of the exceptions to the brick-and-mortar retail fiasco. But now that it released its earnings, it too is stirring up doubts.
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