The Motley Fool Discussion Boards

Previous Page

Investment Analysis Clubs / Macro Economic Trends and Risks

URL:  https://boards.fool.com/costco-limiting-tp-purchases-34942105.aspx

Subject:  Costco Limiting TP Purchases Date:  9/25/2021  11:09 AM
Author:  tjscott0 Number:  630292 of 637138

https://kvia.com/news/business-technology/2021/09/24/costco-...

Costco is once again placing limits on purchases of toilet paper, paper towels and cleaning supplies.

The Delta variant continues to spread across the globe, sending demand for those items higher. But that’s not the only reason why Costco is limiting purchases. The warehouse store is also having trouble finding trucks, drivers and shipping containers to get the items to its stores.

“The factors pressuring supply chains and inflation include port delays, container shortages, Covid disruptions, shortages on various components, raw materials and ingredients, labor cost pressures and truck and driver shortages,” said Costco CFO Richard Galanti, speaking to investors after reporting quarterly results Thursday evening. “Various major brands are requesting longer lead times, and in some cases, difficulty in finding drivers and trucks on short notice.”


Deja vu

Costco is proactive:
"Rather than just pay to move containers of freight from Asia to North America, Costco has chartered three container ships, with each ship able to carry 800 to 1,000 containers at a time. Costco anticipates it can make 10 cross-Pacific trips a year with the ships."

Meanwhile inflation pressures:
"Shipping costs are making some items more expensive, adding to other inflationary pressures.

“Price increases of pulp and paper goods, some items [are] up 4% to 8%,” said Galanti, the Costco CFO. Plastic items, such as trash bags, Ziploc bags, disposable cups and plates are up in the 5% to 11% range. Non-durable metal items, such as aluminum foil and beverage cans are up in the mid-single-digit range."
Copyright 1996-2021 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us