This morning, Costco Wholesale Corp. (NASDAQ: COST) announced that it is going to shut two of its home furnishing stores. The closures will take place in July, and the company is blaming the action on the recession.
Costco CEO Jim Sinegal noted, "The current economic slowdown and resulting weakness in the home furnishings business in particular have led us to conclude that the single-format Costco Home concept does not fit into our long-term expansion plans." The stores are located in Kirkland, Washington and Tempe, Arizona.
According to the company, there should be no layoffs stemming from the decision -- and the company will continue to offer home furnishings at their wholesale clubs. Moreover, the company does not believe the closing will impact the company's bottom line.
I have one major question about this closing: Is it really the economy? Don't get me wrong, the economy has been bad (and it may continue) -- so hold off on the "yes, it's the economy" comments. However, what if Costco is using the economy as a patsy for its own bad decision? Think about it, they are closing just two stores -- stores whose leases are about to run out. Perhaps it is just me, but does anyone out there think Costco may be blaming the economy to save its hide for a failed concept?
Perhaps this is just the conspiracy theorist in me coming to the surface, but the stock is performing well (rallying since the beginning of March) -- this just doesn't seem to be the time to close existing stores. Maybe, just maybe, the company decided that the home furnishings stores were a poor concept and are trying to save face by blaming the economy.
I know this is a far-fetched idea, but it is possible, right? Think about it, Costco is closing just two of its more than 1,000 stores? Yes, home furnishings probably didn't perform well during the economic downturn, but the stores may have been performing poorly beforehand, correct?
Closing Bell: Economic Catapult for Thanksgiving & Black Friday (WMT, TGT, GRMN, GOOG, MSFT)
Deere up on Q4 earnings performance
Reid Hoffman: LinkedIn will go public (at some point)
Reader Comments (Page 1 of 1)
4-08-2009 @ 2:16PM
eshannon said...
DUH ?
4-10-2009 @ 10:42AM
Sunshine said...
I don't know if you noticed, but since the economy went down hill so did Costco's stocks? You are partially right but mostly just blowing hot air. There were only two Costco Home stores, because they were a trial experiment for Costco... Think about it, wouldn't the stores do bad if there are only two of them and you can buy all the furniture on Costco.com or even in the stores. Since they switch out there items so often.
Also if it was jsut a trial and they were doing bad and the economy is bad then why keep stores open that are just going to cost more money then it is worth?? You can still purchase home/furniture items online... so really it is not something that has particuarly failed... it is just a budget cut to keep the rest of the company on track. I wouldn't say that you are conspriacy theorist, just not looking at all the facts out there.
5-12-2009 @ 9:38AM
shannon said...
I live in Woodinville, WA and have furnished my home by shopping at the Kirkland, WA Costco Home. Several times I have been in there I noticed it was nearly dead. I went in to buy a mattress and asked how business was and they salesperson said it has been really slow. Keep in mind that the furniture at Costco Home is not cheap. I paid almost $5000 for my dining room table and chairs. They have high end items there. I really feel that it is recession driven and I am sad to see them go.
5-13-2009 @ 4:10PM
Kate said...
You guys, Costco HOME is closing it's stores, which has nothing to do with Costco Wholesale... different buyers, different inventory, different websites. There are only 2 Costco Home stores that exist (Washington and Arizona), and they ONLY sell home furnishings along with other stuff such as art, sculptures, etc., but it's only things for the home. So it does make sense that is could be the ecomony... look at all the other furniture stores that have gone out of business!