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(Chron)   Wall Street analysts angry that Costco treats its employees like human beings   ( divider line
    More: Asinine  
•       •       •

31369 clicks; posted to Main » on 19 Jul 2005 at 3:37 PM (12 years ago)   |   Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»

464 Comments     (+0 »)

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2005-07-19 04:30:07 PM  
The membership is worth it just for the cheap gas...

& huge stainless steel tool chest
& giant playset
& camping gear
& meat
& fruit/veg
& snacks
& 1.50 coke/hotdogs!


/loves a good story for once
2005-07-19 04:30:12 PM  
Wallstreet Analysts: #3 on the 'To be executed after the revolt' list.
2005-07-19 04:30:13 PM  
(looking up the Warehouse Finder on Costco's site)

Hmm, 12 miles for the closest one, as the crow flies, in an unfamiliar part of town. But I wonder if they're hiring...
2005-07-19 04:30:21 PM  
Hmm, I haven't had too many bad experiences with Sams club, but nothing stellar either. My fiancee and I just went with the closer company for establishing our home.

Feh, well maybe I'll have to reevaluate come next year. It's unusual for FARK to write love letters to a corporation. It's like reading about Google on Slashdot.
2005-07-19 04:30:30 PM  
The closest thing I have to religion is preaching against Wal-Mart and Sams and FOR CostCo. Employees are friendly and helpful. Stores are CLEAN. Merchandise is better. Food is good to above average. Don't need massive quantities, but things like meat/juice/detergent - are great buys there and it saves weekly trips to grocery stores. If there HAS to be a big box store, I would much rather it be a CostCo than a Wal-Mart.
One time I am walking through the new CostCo here and this group comes walking by talking on their cell: "Yeah, it's just like Sam's, only it's cleaner with wider aisles, the stuff is better and the prices are lower." I almost burst a gut!
2005-07-19 04:30:56 PM  
While it sounds like this guy is following a smart strategy...

as a general principle, keep in mind that the shareholders own the company, and a CEO (an employee of the company) being 'generous' is giving their money away.
2005-07-19 04:31:33 PM  

The company doesn't appear to be stagnating, or hurting for profits... they just want to squeeze every last dime out in the quarterly earnings reports, so that the stock prices goes up an extra 1%

I dunno, their market cap looks pretty flat over the last five years, and they're not expected to do that great in the next few years. That's a pretty long term trend.
2005-07-19 04:32:32 PM  
fark you wall street.

If a company can be successful, AND treat its employees with good wages and great benefits I simply do not see a problem.
2005-07-19 04:33:11 PM  

Maybe a single person doesn't need it but it's just the wife and I and we buy plenty of stuff from Costco. Yes I don't need a box of 50 snickers but I get stuff like meat, cereal, books, cd's, dvd's, soap, toothbrushes, toothpaste deodorant, vitamins, chips, pop, beer, wine, paper towels, tp, tent's, golf balls, outdoor furniture, a bbq, school supplies(when I was in school) burritos etc...

I could go on and on.
2005-07-19 04:33:46 PM  
Yep Wegmans is the best grocery store around! They also own Chase-Pitkins, a home depot type store, with better prices! I can't go to there stores cause I live in Jersey now but when I lived in Upstate they were awesome!

um, check the store locator, there at 3 Wegman's stores in NJ that I know of and are probably others I haven't passed near.

/best produce and fresh meat/seafood anywhere
//more slashes since Wegman's rocks so much
2005-07-19 04:33:50 PM  
MacGabhain: I'll have to talk to my wife, but we're switching to Costco.

[image from too old to be available]


[image from too old to be available]

i keed, i keed (sorta)
2005-07-19 04:34:26 PM  
Everybody thinks this is radical -- it isn't. Years ago, much of what Costco is doing was common practice. However, in boom-time economic bubble markets, those old practices were replaced by the Wal-Mart philosophy. The exploding markets demanded it, and most everybody benefitted by the new model.

Think about it. People *used* to think they would be with their employer for life. There was a whole business model for which employee loyalty was critical. It had its plusses and its minuses, but with the 1980s and 1990s it just couldn't compete. Wall Street told businesses to drop it.

But now, we are no longer in an overheated economy, so the boom-time model has lost a lot of its economic desireability, and the old model is starting to look good. My guess is that the old model, pragmatically updated it can now be called the "Costco model", will slowly start to replace the Wal-Mart model until eventually Wall Street will insist on it.

Strictly because it is a better business model for the times.
2005-07-19 04:36:02 PM  
'One analyst, Bill Dreher of Deutsche Bank, complained last year that at Costco "it's better to be an employee or a customer than a shareholder."'

Umm dumbshiat isn't that how it's suppose to be? If you want to long term invest in a growing company wouldn't you hope they treat their customers and employess better than a fat finger slob behind a computer terminal trading stock? Now I wish I have both a Costco and Wegmans where I live!
2005-07-19 04:36:05 PM  
BTW isn't this how Henry Ford got rich, by paying his employees a decent wage so they could afford to buy the product they made?

Wal Mart uses a variation on Ford's theory...they pay their employees so poorly that they can't afford to shop anywhere else. They even get an employee discount.
2005-07-19 04:36:15 PM  
[image from too old to be available]

Unavailable for comment

/greed is good...
2005-07-19 04:36:59 PM  

Sorry. You are wrong. All publicly traded firms first obligation is to the
shareholders of the company. By buying stock you provide operating capital
to the firm in the form of shareholder's equity. It's pretty basic accounting.

You seem like you understand the system, just choose to beleive that there
is no logic or integrity in business. This article seems to contradict your

My point still stands whether you beleive the Market is as you put it, a shell
game. The Stockholders supply needed capital to a company in return for
shares and voting interest (sometimes).
2005-07-19 04:37:11 PM  

Similar 10-year performance to Wal-mart. Invest in a company that treats its employees like shiat and make the same amount of money as one that treats its employees well. What's a capitalist to do?

You can take any stock and see that it follows market trends. The size difference between the two makes them incomparable anyway. Costco employees about 60,000 people while Walmart about 1.7 Million.
2005-07-19 04:37:42 PM  
I'd just like to say kudos to the Costco buyers. They are responsible for seeking out and evaluating the products to sell. And they do a fine job of selecting quality products. Generally speaking, the stuff isn't crap. In fact, it's usually well above crap. And at a great price. I recently bought a gardening tools set for $34. I only really needed the grass shears, but when I checked out the hardware stores, they were selling the grass shears for $27 -- the same grass shears as in the Costco set. So I paid an extra $7 to get a 7-piece set instead of a single tool. Amazing.
2005-07-19 04:37:58 PM  
I've seen this scenario played out before. It's called "good cop/bad cop."

In reality they both want to fark you over for their own continued subsistence.
2005-07-19 04:38:14 PM  
I twenty-seventh the HERO tag.
2005-07-19 04:38:15 PM  
One of the companies I work for interviewed the CEO of Costco a year or two ago - really nice guy, he actually gets down on the floor of the stores, chats with staff, makes sure everything is running smoothly, etc. Got a lot of respect for management like that.

You gotta love these analysts who look at absolutely nothing except the finanicials. Yup, screw the employees and the customers to make a bit more money for the shareholders today. Who cares if the company goes under in a few years, the current shareholders will probably be retired in the bahamas by then and could give a fark about the company, the employees, the customers, or sweet fark all else while they sit on the beach with their cocktail.

Costco is a bit of a contrast to HP's current situation (laying-off ~14,500 employees and hiring some new manager for 15.2 MILLION dollars + options + stocks + signing bonus).

2005-07-19 04:39:14 PM  
Deny your false idols and bow to your costco overlords
2005-07-19 04:39:52 PM  
Story like this getting farked is only going to make this company do even better, which it so richly deserves.

That man is my hero.
2005-07-19 04:40:04 PM  
Y'know, I think the whole Wall Street thing with Costco can be summed up as "Yeah, they're making good money. But they could be making assloads of money!"

It seems to drive 'em nuts that a corporation decides it's making "enough" money, and is using the "excess" to make the lives of the people behind their success just a little bit better. Blasphemy!
2005-07-19 04:40:29 PM  

Wallstreet Analysts: #3 on the 'To be executed after the revolt' list.

So who'll be 1st (and 2nd) against the wall?


as a general principle, keep in mind that the shareholders own the company, and a CEO (an employee of the company) being 'generous' is giving their money away.

According to TFA, the CEO owns $150M in stock, so he's a significant owner of the company too.

The CEO's obligation to the shareholder's is to run a profitable business, and this guy is doing that by following his strategy. He feels that the company won't be profitable long-term if he listens to Wall Street analysts and tries to exploit his employees and screw consumers.
2005-07-19 04:40:34 PM  
Henry Ford was told he'd go out of business paying his employees $5 a day. His idea was, if his own employees couldn't buy what they made, then he'd be in trouble. Granted some of his labor practices sucked, but the wage side didn't. As for fashioning the modern corp with it's distinct arrangement of departments and their reporting structures, has a lot to do with GM CEO Alfred P. Sloan. Yes Ford and GM at one time were not business punchlines. Scary isn't it?

/yes that's the Sloan in Sloan and Kettering
//Kettering invented the electric starter for car engines
2005-07-19 04:40:52 PM  
I bought a set of the Kirkland brand tires from Costco....Put them on my wife's car, had an alignment done, did the rotate and balance thing, the whole nine yards....Tires were wore out at 29,000 miles.....I wasn't happy about it, but figured, "ehh, you get what you pay for".....Back to Costco for more tires.....Looking at the selection, the sales guy tries to steer me to the Kirklands again, I say no thanks, tell him I wasn't real happy with them the last time I bought them....He asks me if I had returned them, I said no, they are on the car now......He tells me Costco has a 100% satifaction guarantee....if I'm not happy with the tires, they will take them back and give me my money back....Now, I didn't ask for this or even attempt to slide it into the conversation, I was simply looking to buy some new tires. The guy winds up selling me 4 top of the line Michelins (about $100 per tire), give's me back the $200 or whatever I paid for the Kirklands AND gives me a refund card from Michelin for an additional $60 off through the mail.....I wound up paying about $125 for four brand new Michelins with a 65,000 warranty.......Yeah, Costco will always get my business.
2005-07-19 04:41:32 PM  
I'm renewing even if all I do is buy gas. It will be worth it.

I'm sure I can find other reasons to go there to.

I know it's been said.... This is a company to work for.
2005-07-19 04:42:03 PM  

They are too far away from I live, but they have one going up in MT. Laurel, will have to find out where! That is within 30 minutes and they got a Wally World and Lowes there too!
2005-07-19 04:42:10 PM  
wow.... so many converts with just one article...
walmart sux... as most seem to agree...

havent met an unhappy costco worker yet...
wish i worked there for the pay and benifits...
sample people are awesome...
prices are super cheap...
great variety of products...
they thrive on the its cheap so lets buy it who cares if its in bulk theme...
meat department and fish and bakery and produce are quite good...
oh ya forgot the amazing return policy... if it doesnt work like at anytime return it to them and u get a new one...

hm... where did walmart start? and where did costco start? maybe theres a clue to why thier policies are different?
2005-07-19 04:42:18 PM  
from wikipedia...."U.S. Senator Hillary Clinton (Democrat, New York) formerly worked as a lawyer for Wal-Mart and also served on its Board of Directors."

wow, my opinion of hillary clinton just took a large drop
2005-07-19 04:42:19 PM  
I was gonna make something with some walmart picture with the words "CostCowned!" stamped on it, but I'm just too tired...
2005-07-19 04:42:38 PM  
We converted when I realized that I tried to avoid Walmart as much as possible (usually only went if someone gave us a gift card), but was still buying at Sam's Club. When our membership came up, we talked about it and switched. I was glad I did and now I'm even more glad.
2005-07-19 04:43:34 PM  
Not exactly. When a corporation goes public it offers shares in order to build capital. The corporation generally had assets to begin with or it couldn't have gone public. Also, corporations can also raise capital through loans, bonds, investments, and preferred stock. The shareholders always own a large part of the company, but they don't own the company. Quite often, a bank owns more. When the company goes bankrupt the banks, debtholders, and preferred stockholders get their money before the common shareholders do. Common stockholders are quite low on the totem pole of company ownership.
Also, keep in mind that a large number of stockholders are often the employees themselves. Like this Sinegal guy.
2005-07-19 04:43:54 PM  
2005-07-19 03:49:27 PM Lone_Gunman
Yeah thats wall street for you... Anyone other than myself notice that HP/Compaq stock has been rising since the announcement letting go of 25,000 people?

/Sick but True.
//Fark Wall-Street.

-Of course it did that statement deserves an obvious tag. unfortunately supply and demand dictates the number of employees a company needs...the market for PCs is down, if there is no need for the excess of employees what should the company do with them, continue to pay them to make an excess of product that will sit in retail warehouses and will be obsolete in a year anyway? What good does that do for the company as a whole? If companies like this dont cut jobs in order to maintain efficiency then they will go out of business and then EVERYBODY who works for the company is screwed.

/before I get flamed as a heartless fark who doesnt care about employees , I have been laid off myself, unemployed for 6 months. I know what its like...I found another job and went on with my life. when it happened I understood because it was not economically viable to keep my coworkers and I.
//I like what this guy is doing, I wish I worked for Costco during my days in retail
2005-07-19 04:44:19 PM  
Doc Daneeka:

He feels that the company won't be profitable long-term if he listens to Wall Street analysts and tries to exploit his employees and screw consumers

I always love the silly rhetoric. Yea, paying people and giving them job is "exploiting" and selling things to people is "screwing".
2005-07-19 04:45:27 PM  
Just another voice crying in the desert: CostCo is awesome.

If their products were 10% more expensive than Sam's/Walmart, I'd still shop there - but they're not. On products both warehouses carry, CostCo beats or rivals Sam's, in addition to which they carry some better stuff. Get gas there, for the love of god.

You'll save the amount of the membership fee the first time you go in, if you have a family.
2005-07-19 04:45:29 PM  
[image from too old to be available]

2005-07-19 04:46:20 PM  
If you don't have a Wegmans, then you don't really know what a supermarket is.

I live on the friggin' West Coast. I've been hearing about Wegmans for a long time, but it doesn't look like they'll be out here any time soon. Insert creative cussing here.
2005-07-19 04:47:15 PM  
From Philly to Boston:

Sorry. You are wrong. All publicly traded firms first obligation is to the
shareholders of the company. By buying stock you provide operating capital
to the firm in the form of shareholder's equity. It's pretty basic accounting.

Shareholder's equity is simply assets minus liabilities. My major in Accounting was a while ago, so forgive me for not having the grasp of it that I used to. What I do remember is that Accounting is a GAME. When you buy a share of Wal-Mart for $55 on E-Trade, you contibute nothing tangible to the company. That is my point. The only cash flow a company receives due to equity financing is at the time of the initial offering.

The Motley Fool defines it pretty well:

The last main component, Stockholder's or Shareholder's Equity, is composed of Capital Stock and Retained Earnings. Frankly, this is more than a little bit confusing and does not always add all that much value to the analysis. Capital stock is the par value of the stock issued that is recorded purely for accounting purposes and has no real relevance to the actual value of the company's stock. Capital in Excess of Stock is another weird accounting convention that is pretty difficult to explain. Essentially, it is any additional cash that a company gets from issuing stock in excess of par value under certain financial conventions.

Retained earnings is another accounting convention that basically takes the money that a company has earned, less any earnings that are paid out to shareholders in the form of dividends and stock buybacks, and records this on the company's books. Retained earnings simply measures the amount of capital a company has generated and is best used to determine what sorts of returns on capital a company has produced. If you add together capital stock and retained earnings, you get shareholder's equity -- the amount of equity that shareholders currently have in the company.
2005-07-19 04:47:39 PM  
LesserAtuin: If you don't have a Wegmans, then you don't really know what a supermarket is.

Ever been to Giant Eagle?
2005-07-19 04:47:57 PM  
Since we are talking about awesome places to spend money. Anyone ever been to a Sheetz gas station?

I love that place. Unfortunately, they don't have them here in Georgia.
2005-07-19 04:48:15 PM  
Regarding the I-spend-too-much-when-I-go-to-CostCo dillemma, the solution my gf and I came up with is, when the budget's tight, "If you can't carry it, you can't have it."

You'd be amazed at the ridiculous tower of crap you can balance when you decide something is too good of a deal to pass up. Just stick to the plan, and you'll save yourself a fair amount.

Oh, yeah, you can't both help carry the same thing. That's cheating, and invites added piling on the big shared thing.
2005-07-19 04:48:21 PM  
[image from too old to be available]
2005-07-19 04:48:29 PM  
From Philly to Boston

But at the end of the day, what's better, trashing a company in the name of EPS or keeping it together and stable so that ten years from now it hasn't fallen apart at the seams? There's tech companies that have cut R&D for the sake of EPS, that should raise all sorts of red flags. And anyways after the IPO when you buy shares you could well be buying them from an investor and not the company itself.
2005-07-19 04:48:37 PM  
This is what happens when ANY company goes public. They are no longer allowed to just make a profit, no matter how large. They have a legal obligation to their stockholders to continually make bigger and bigger profits no matter how.
2005-07-19 04:49:27 PM  

Regarding the I-spend-too-much-when-I-go-to-CostCo dillemma, the solution my gf and I came up with is, when the budget's tight, "If you can't carry it, you can't have it.

I tried that this weekend. She was like: want a cart, I was like, hell-no. Unfortunately my roommate was there too and I ended up paying
2005-07-19 04:49:59 PM  
I like Costco, we are longtime members. My wife just got back from a trip there.

But I have one complaint: the cart frisking at the exit. I know many retailers do this, all with some lie like "just making sure you got everything you paid for".

I don't really mind their assumption that I might be a thief, it's the frequent wait to get through this bottleneck that pisses me off.

Of course, I only really visit one Costco. Does anyone go to one that doesn't do this?

This and distance make Walmart a lot more convenient for me. I often go to WM if I want something quick. This WM has employees at the exits too, but they only spotcheck customers so you never have to wait in line to leave.
2005-07-19 04:50:18 PM  

I wound up paying about $125 for four brand new Michelins with a 65,000 warranty.......Yeah, Costco will always get my business.

Yup, smart retailers that will lose a bit of profit to gain a customer for life. That's worth far, far more than losing a couple hundred bucks over a set of tires.

I've only had to return products to Costco twice - a CD-burner that failed after 8 months, and a pair of shoes that had mismatched sizes in the box for some reason. I didn't even have a box or any of the associated bits with the CD-burner, just the receipt. No problem at all (although I expect they keep a file in their system with your account number so they can flag you or refuse to renew your membership if you start abusing the return system - it's only logical).

/Costco member for ~12 years
//Customer about every 2 weeks :P
///Cheapest price on Harry Potter in town :P
2005-07-19 04:50:43 PM  
I've loved Costco for a long time, and now this is another reason! Yahoo!...err...GOOGLE!
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