Shop Talk

Retailers, consumers and prices

Check Out Line: Costco’s profit secret is a gas

December 11, 2008

Check out the basically flat profits at Costco. costco1
 
Well, at least they are not falling, like many other retailers. But one of the reasons is something that is kind of hard to emulate at, say a Neiman Marcus or J Crew — selling gasoline.
 
Many of Costco’s warehouse clubs sell gas and the way the company operates that business gives it an advantage when fuel prices fall.
 
Costco replenishes its supplies on a daily basis, unlike traditional gas stations that bring in new fuel weekly. That means that when fuel prices fall, it is selling gas purchased at a more current, cheaper price, which helps margins, while competitors are selling gas they paid more for.
 
Okay, it probably doesn’t fit the business model of Macy’s. But if it needs the help, maybe Diesel could start selling diesel.
 
Also in the basket:
 
Recession to worsen, deflation a risk: report
 
P&G keeps profit forecast, says sales may fall short
 
Lululemon posts higher profit, cuts 2008 outlook

(Reuters photo)

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