Costco CFO says company has been 'fortunate' to avoid theft

Costco CFO Richard Galanti said Thursday the company has been "fortunate" regarding theft. 

Galanti at one point said during Thursday afternoon's earnings call that Costco’s shrink "is intact," saying the company hasn't "seen any major changes in shrinkage." 

He noted it was a question the company had received a "couple times of late because of some of the companies out there that reported much higher shrink."

In the retail industry, the word "shrink" refers to theft and other inventory loss.

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"It fluctuated a couple three basis points up really before COVID as we rolled out self-checkout and, since then, it’s come back down a little, and it’s in a very tight range," Galanti added. "We’ve been fortunate in that regard."

Costco, known for the large sizes of its product offerings, has previously said it thinks its theft was "well below those of typical retail operations" due to the company "strictly controlling" entryways and to its use of memberships. 

Some retailers have been flagging higher levels of theft.

Dollar Tree Inc. said earlier Thursday as it reported its own earnings it was "not immune to the external pressures affecting all of retail, notably, the margin impact of elevated shrink and the product mix shift to consumables." 

Due to those two factors being expected to continue through the remainder of the year, it said it tweaked its fiscal 2023 projection for its diluted earnings per share, saying it would end up in the $5.73 to $6.13 range. 

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Executives at Kohls, Foot Locker, Walmart and Target have also raised issues with theft in recent weeks, as previously reported by FOX Business.

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The National Retail Federation said in one of its reports that total losses from shrink were $94.5 billion in 2021, compared to $90.8 billion in 2020.

Galanti’s comments came as Costco’s third-quarter financial results were released. 

Ticker	Security	Last	Change	Change %
COST	COSTCO WHOLESALE CORP.	952.73	+24.65	+2.66%

The company saw a 2% jump in its quarterly revenue compared to the same period in 2022, coming in at $53.6 billion. Of that total, $52.6 billion came from net sales, while $1 billion was generated by membership fees.

Net income for the third-quarter, at $1.3 billion, narrowed slightly. In the same three-month period last year, it reported $1.35 billion.

Danielle Genovese contributed to this report.