Are a big percentage of TVs returned after 90 days?
Majority of the TVs are returned within 90 days, but when the company does a $2.5 billion a year business in TVs, a small sales return percentage, which has low realization when disposed off, has a greater impact than anticipated.
Are the trends on new club members similar to what you have experienced in the past?
There are no major differences in the trends on new club members.
From what products do you see the most opportunity going forward?
There is more opportunity from general consumer products.
How much longer do you expect Canada to be weak because of the tobacco issue?
Canada is expected to be weak until July or August because of the tobacco issue.
Do you expect international comparable sales in the mid single digit until July or August?
International comparable sales are in double digits as there was a pending price increase there. The detriment should improve a little, but at it is expected to be lower from now until summer.
Where does the conservatism for third quarter earnings guidance come from?
Payroll impact may be a little less than a full penny because it starts in mid March. Sales returns are expected to impact the next few quarters even if the policy is changed. Hence the management is being conservative regarding the third quarter earnings guidance.
Do you take into consideration from a strategy standpoint that Wal-Mart announced their fourth quarter gross margins at SAM''S are up?
The company finds out weekly comparable sales of its competitors and reacts to whatever the competition is doing to try to stay ahead of them. The management thinks that part of SAM''S argument for improving margins is greater level of global sourcing and collaborative buying with their parent that they have done over the last couple of years.
As you raise the low-end wage rate, do you raise the whole hourly wage structure?
In the old structure, it took an hourly full-time employee a little under a year to go from $10 an hour to $11 an hour or from $10.5 an hour to $11.5 an hour. There are a handful of new hires that automatically get a raise in wages in 6 months. The hourly wages of workers at the top of the scale are increased in the low 2% rate every 3 years.
Are you seeing increase in utilities costs?
Total utilities as a percentage of sales for the year-to-date period are flat, over the year ago period, but the costs per hour are higher.
Do you consider Smart & Final as competition and do you think anything is going to change under different ownership?
Smart & Final is a competitor for all food service people that Costco serves. The company is not very concerned about any changes in Smart &Final''s newest capacity.
|
