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Costco CEO: High wages, high volume drive results for Costco shareholders
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- čas přidán 14. 08. 2024
- "Mad Money" host Jim Cramer chats with Costco CEO Craig Jalenik about the membership warehouse retailer's business model has translated to higher stock prices.
Charging low prices, moving large amounts of volume and paying high wages are all components in Costco’s secret sauce to return value to shareholders, CEO Craig Jelinek told CNBC in an interview that aired Tuesday.
The stock has risen almost 110 points within the past year. An Oppenheimer analyst upgraded the stock earlier that day, assessing a double-digit rise ahead.
“One of the things about low prices, you generate a lot of volume. When you generate a lot of volume, you generate cash, and you have a responsibility to your shareholders and, you know, the stock has appreciated,” Jelinek said in the “Mad Money” interview.
Costco Wholesale shares jumped 2.8% in Tuesday’s session to a new all-time high on the heels of Oppenheimer’s outlook revision, boosting the stock to “outperform” from “neutral.” The firm also upped its price target on the security to $335 from $300, citing an attractive valuation, upbeat top line trends and potential for a special dividend. Costco last offered a $3.1 billion special cash dividend, or $7 per share, in 2017.
“We’ve done special dividends in the past. We always think about when the right time might be to do a special dividend. We have no plans right at the moment, but we always - we’ll always look at that,” Jelinek said in the sit-down with Jim Cramer, which was taped Friday.
A special dividend is a one-time distribution of cash to shareholders outside of the company’s normal dividend. The extra dividend is typically higher than what the quarterly dividend offers. Costco, an international chain of membership warehouses, currently pays out a dividend of 0.83%.
In the interview, Jelinek said Costco offers “great prices” in its 785 stores worldwide while paying “good wages” because business should “never do it on the back of your people.” Of the retailer’s 163,000 employees in the United States, the average hourly pay is nearly $25, he said, adding that staff who have been around for a decade or longer are paid almost $29 an hour. Costco also offers benefits and 401(k) plans.
“You want longevity; you want good employees. They know their jobs,” he said. “They show you ways to become more efficient as a company. You’re only as good as the employees that work with you.”
Costco had 99.9 million card-carrying members as of late November. The most basic membership costs $60 per year to shop at the grocery warehouse chain. The company also has a plan targeted at small- and medium-sized businesses, which shop the store for retail and office uses. Last year, Cramer included the company in his “WATCH” list of five top retailer stocks, including Walmart, Amazon, Target and Home Depot.
The business model is built to have low overhead - doing away with salespeople, decorated buildings and delivery, among other services - that allows Costco to pass on cost savings to members.
“We need a lot of volume going through these, as we call them, warehouses. So that’s really what it’s about,” Jelinek said. “We do a lot with very few units [and] turn a lot of inventory, and it just works the best way for us to do it that way. We will continue to expand our Costcos, but we are not going to have one on every corner.”
Costco has grown more than 70% within the last decade. In the 2019 fiscal year ended August, Costco brought in $152.7 billion in revenue and $8.19 of profit per share, according to FactSet.
When the company reports its second-quarter fiscal 2020 results in March, Wall Street forecasts $2.07 of earnings per share on $38 billion in sales.
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Costco pays its taxes. Costco pays its employees well. Costco always tries to do the right thing. (I'm a proud 32-year employee.)
Fred Good you know you can get fired for writing this right, fake review
I've been working at costco for past 5 years
Great company
And you should be. A great company!
I think my kids should work at Costco, and I don't think they need to go college. They are set.
@@sifeddinbayoud6176 :D LOL! Fortune 500 #14!
Costco is capitalism at its best. Humble leadership. Well paid employees. High quality products at low prices.
literally, and while that happens the consumer wins and they win
You can tell this CEO has values, and we hear in America have forgotten what that is.
I have worked there for almost 5 years, the benefits are some of the best in the country
@J Blank Why not, it has made it in previous recessions, and through the EU recession that is still ongoing. It has a different audience than Amazon.
@@NdxtremePro Yeah. People don't realize amazon is not very cheap. Second, when it comes to food amazon is expensive while Costco is cheap if you have a family of 3+. For less than a family of 3+ there are a lot fewer things to buy from Costco but there are still some things to get.
This is a CEO I can support. That’s a culture that works -
And you would think that other companies would drop their ego and take example on Costco. That shows how incompetent others are and how they only care about their pockets.
I've worked for Costco for 31 years. Craig is exactly like he comes across. Extremely approachable and humble man just like his predecessor Jim. Hard work at times but I've never had to worry about a paycheck in the hardest of times.
Dude you must be loaded because of the stock and the amount of time you’ve worked there. Congratulations!
damnnn 31 years???? what positions have you held? great pay and great work environment?
He's right about low employee turnover. I bought my tires at the Kirkland, WA location back in 2012...went back in this past summer 2019 and it was the same guy working the cash register in the tire shop!
Christopher Walken 😂
At our local store, Kurt works at the exit and has basically watched our son grow up. Fantastic to see the employees love their job enough to stay there.
Now, if you go back and don’t see that employee in the tire shop, more than likely, that employee is now learning a new dept in either the same or a different warehouse. Costco promotes from within! Another reason they are a great employer! They put their all into their current employees.
I'll be damned, treat your employees right.. and they stay... imagine that.
Chris Bell I love Kurt lol
Its incredible how genuine and simple his answers are.
My admiration for Costco just increased by seeing how humble and principled their ceo is.
When i started working there as a meat cutter
Shares were $30 in 04
They even mach my 401k 50%
It is a great company
Was able to buy a house in silicon valley. Never thought it would take me this far coming from Luckys super market .
I have worked for Costco for 28 years Costco is an Exellant place to work we have great pay and exellant benefits i still enjoy going to work every shift i would recommended Cotco to everyone who wants a great job
Walmart & Amazon should be ashamed of themselves on the way they treat their employees, suppliers and customers after watching this video. If you have the right values and treat people right you’ll be successful.
*Their temps. Amazon employees get comped really well, or atleast in canada.
@@ganger631 they have to piss in buckets because they dont get breaks
Amazon employees all get paid 15 an hour well that was the statement that came from bezos himself
People should also be ashamed of staying at shitty jobs. Not all jobs at Amazon suck, a friend of mine used to intern there and loved it. Markets are efficient, go build a company that directly competes with Amazon or Walmart.
@@carpettunnel8837 No doubt, I know people who work in logistechs and get comped like 70k a year plus stock options. I just dont like how they contract temps to do their lower echelon work.
I am an empty-nester I shop at Costco for ONE reason only>>> I know they pay their workers well and have good benefits.
Sounds like you’re a business owner yourself. Were you able to offer your employees the same thing?
As a Costco employee for 8 years. Thank you! :)
@@Knailz hey me too!
@@ThePyroKnight me 3 ;)
Thank you Mr Petersen in the name of all of us Costco employees.
He actually seems like a genuine CEO which is rare in today's corporate America.
This CEO is the embodiment of American values. Hard-working, honest, fair to his employees. Wish we had more companies like this
Costco treats their employees as investments not cattle.
I was in Costco the other day and the employee was gushing about his $25, an hour, 401k with stock options, and healthcare to cover his family.
Does your boss take care of you and your co workers and family the same way?
Mining is the best job for high pay straight out of high-school, this guy was making 60k a year as a coal miner, working 8 hours a day at 18
@@alek488 However, it causes lung issues that results in a significant decrease of QALY, or the numbers of years of normal quality life. It's not worth it.
Lol I like how he's wearing a general employee name tag. A big thing I like about Costco is there ecommerce deals.
*their
Thanks for shopping at Costco!
-Happy 15-year employee
Same, 15 yrs in April! #372
❤️spending at #Costco! Keep up the great job!
Jeff bozo should learn from this guy .
He'd probably spontaneously combust if he was in the same room.
@Dave Chappelle And yet he can't pay his employees. Boo-hoo, won't somebody think of the multi-billionaires!
Dave Chappelle But you’re not killing yourself everyday in amazon with poor working qualities
Such a humble guy.
Dave Chappelle amazon pays 15 with zero benefits and you’re disposable. At Costco you start out the same but have FULL benefits and stock options with employer match. It’s a REAL company, amazon is just a middleman that’s doomed to fail like the rest of them that have high turnover
Costco singlehandedly stopped inflation in Iceland by entering our retail market. Bringing immense value to society for members and non members alike.
Really wanted to stop at the Reykjavik location when I passed by it. Prices overall are noticably high in Iceland so I'm glad Costco could help alleviate the inflation with bulk.
Do they sell Danish products or American out there?
@@552mustang The inventory of Costco in Iceland is, mostly, based on the inventory from Costco - United Kingdom. There is no Costco in Denmark. Costco operates only in 4 countries in Europe, those are Iceland, U.K., Spain and France.
Does Costco exist in Asia?
@@jogiebalansag7250 Costco has stores in Japan, South Korea, Taiwan and China. Apart from these countries, there are stores in Australia, USA, Canada, Mexico, United Kingdom, Iceland, France and Spain.
I work with Costco as a vendor and I can tell you that they treat me very well. They have a high level of transparency and respect even for those that don't work directly for them.
The Costco way of running a business should be taught to business owners everywhere both big and small.
No doubt!
It's very rare to nonexistent to see a small business in 2020 to have this kind of payroll. To even get to the point where you get have a few employees and cut yourself a small paycheck is daunting.
Work for Costco over a year now. Best decision I ever made. Costco is the best
Why are they the best
@@farzana6676 good pay and benefits which pretty much no other retailers give their employees. My aunt has been working there for over 20 years and has a great middle class life on the salary
@@farzana6676 for me what makes it the best is how they treat their employees. Costco treat both members and employees with respect. Most managers and supervisors come from the inside. Costco has great benefits such as 401k dental vision and health. Plus teladoc umbrella. And much much more. Costco offers many promotions transfers if you don't like your department or your occupation or just simply where you are at or if you want to try something new you can sign up on openings. Most jobs don't give as much opportunities like Costco. Costco stays above and as a company is tries to go above standard like wages how employees are treated how members are treated. Members is number 1 priority. We have a refund policy that everyone loves and sadly yes many people abuse that policy but people trust our company because of that policy. Or like now when costco let go coke cola contract to maintain the $1.50 hot dog with soda and free refill. They didn't worry about money loss they worried about customers satisfaction. Not only that but prices are low because one we do not advertise. We don't have groceries bags we recycle our boxes. Sometimes I can say the admin team isn't always the best but the company as whole is. CEO always check on stores. Regional always checking on stores. Not only that bust just almost year now where how our sick/personal time works it's no longer a set amount of days the hours you work you earn sick/personal time. The best I love about my job is that my coworkers been working in the company 10+ years the longest is 1999 in our warehouse. That long time and that person is truly happy living a middle class life but stocks in the morning. Like now our stock has been going up giving us a better output on our 401k. You can't beat that for retail
@ exactly
@@bloodynife0310 I have three direct coworker in a costco in canada who have been there since 1989 and 1990!
When I was a Costco Employee, I was always treated well and with respect. I still go back 15 years later and say hello to my friends who still work there.
Almost a 30 year employee and never looked back !!!
I can vouch, best place to work for a retail environment. Its doesn’t get better. Will stick with this stock till I die
then you won't get your money back
@@mike365fly Metaphorical, I'm sure. He means he'll hold until retirement, which is smart.
Shows you dont have to treat your employees like garbage (Amazon, Walmart, Gamestop etc) to be sucessful.
Mad respect for this guy. When his shareholders tried to bully him about the $4.99 roasted chicken prices and the $15 an hour wagea he told them to take a hike.
Wow very impressed. I didn’t know Costco workers got paid well and treated well. Reading these comments people love Costco
What a lovely person to have as a CEO
Costco is such a great company!! They understand if you pay your employees well they will be invested in the business. Costco also is the king of customer service. The return policy is stupidly ridiculously fantastic. I was double charged for an item once and went back the next day and they refunded me for the purchase price no hassle. Costco hands down is my favorite retailer and I'm an extremely loyal customer. Walmart and Amazon should take a good hard look at how Costco makes a profit with class and respect for employee, customer and stockholder!!
Daniel Proulx Costco is awesome. They get me in door for the dairy (organic eggs etc) , then I stay for other stuff
Amazon can not and will not whipe costco off the map.
THEY ARE INVINCIBLE !
As long as they keep that culture that Sinegal started, they will be invincible. But, you never know.
When the government will bail you out nothing is impossible
Great interview! Good to see "good" still exists in corporate America!
Right,!
And all the "pundits" hate Costco. BWAHAHAHAHA
I hope the owners, chairman, and CEO can read these comments one day. I haven't work at Costco before, but i do grocery shopping there every week, and what i've heard about it from employees and what the CEO is saying here makes it is totally true. I can tell you one thing about this company, Costco is one of the very very few retail company out there you can happily work for unlike other big retail companies such as Walmart, Home Depot, Target, Amazon and goes on... Costco actually care about their employees. They're not greedy as other companies, they treat their employees with respect and fairness and make sure their employees make good money and have good benefits.
Craig is just the way you see him here, this is no act, he is truly a wonderful man and that goes for all our upper management team. I’ve worked for Costco for 18 years and will be with this great company until I retire. I urge anyone, young or old to work at Costco, the opportunities are endless and very rewarding.
The BEST retail company in America!!!
Very heart warming to see how this company is ran by such a very humble CEO. Just watching the video gives out a great vibe, make you want to be a better person. Don't have words to explain
$29 an hour! I don’t why I got in debt for college..
Adam I didn’t know that, that’s pretty good
Adam glad you getting compensated because that’s a dangerous job
I work at Costco and got to meet Craig when the store opened!
I've met him 3 or 4 times now, and I was able to meet Jim back in 2012 when I first started working for Costco. Both are very nice and down to earth guys.
Unique business model make Costco is a long time winner, glad I’m one of the shareholders of this company
Takes guts to go on CNBC and argue for higher wages.
I’m a United States cattle producer. I’ve worked in packing houses, feed companies, and ranches. Costco is my number one go to for buying beef; I don’t even bother putting up my own beef anymore. Awesome products!
Thanks Craig FOR KEEPING COSTCO FRIENDLY AND BEST BUY PRODUCTS.
No matter what the business is, large or small it reflects the CEO characteristics
.Costco success has certainly spawned from their CEO humbleness.
Soda + hot dog = $1.50
God bless costco 🇺🇸
Great interview. Proud to work for this company.
Tami Just Tami and you went out of your way to say so. You can tell walking through Costco employees are happy.
BKNb 77 same here. Currently out of work due to a surgery, where costs wasn’t a deterrent, and for that I’m thankful. looking forward to getting back to work soon.
I love Costco and so doesn’t my family. It’s a great company. There policies are great. Credit card, cash back for gas.
American companies and the government should learn that people want neither government handouts nor excessive, ridiculous over the top entitlements. Rather, we are willing to do hard work and stay long term so long as we have fair benefits, wages, an ethical management and a safe workplace. Please stand by your workers so they can buy your products and grow the economy. For that, they will be willing to move mountains and make your company succeed for the long haul.
Agreed, but sadly that doesn't align with shareholder values, who want nothing more than to see the bottom line go up quarter over quarter
Thanks for the shout out!
-15 yr employee
Although I don't shop at Costco as much as I used to , yet Costco is still the main store of shopping for the very reason that it treats its employees with respect and provides them with good wages and benefits.
Costco is one of the company that is a BUY even it was never cheap.
The only other retailer like COSTCO is PUBLIX groceries in the Southern states - very fine people, very fine stores - great to their employees
I agree the people crush sams, rude employees and rude customers. COSTCO IS AN AMAZING STORE! THE BEST STORE IN AMERICA! STONE COLD!
You know it!
I love Costco and this CEO has my heart too now. What a humble incredible guy. I wish I could meet him. ❤️❤️❤️
It’s the free samples
I'm a 10 year Costco member and very proud of supporting a company that values its employees by paying them good wages. I will continue to do so.
Thank you Costco for making me feel good every time I drive right past Wal Mart!!!
This is a company that will never fail.. Why..? Coz of their employees who will never leave them..
I worked at Costco for 5 years. I have pension due to our Union. My health benefits from Costco only costed me $16 a month
If there are no customers, employees are worthless.
@@carpettunnel8837 the CEO himself mentioned it in the interview that the employees work diligently and always suggest new efficiencies.. Efficiencies = healthy business = lower prices which will always bring in customers..
@@OneManOnFire Sad that you have to be in union to get a pension. The newer warehouses do NOT have unions, therefore NO PENSIONS! Unless you contribute to the 401K those employees are screwed!!
@@mims4949 Sam's Club/ Wal*Mart will close a location rather than allow a Union. Thus, no Sam's Club/ Walmart for me, hello Costco!
P.S. AND THANK YOU FOR BELIEVING YOUR CUSTOMERS TOO!!!
Look how he didn't mention or run thru a bunch of financial bullshyt and focused on their greatest strength - employees.
Proof that it's not a crime for the American worker to earn a living wage.
Costco is a membership club. That covers higher salaries.
Was that ever even in question? Maybe on some remote island a rich guy owns it’s illegal for people to earn money but the USA is likely outside this remote island’s jurisdiction.
Costco prices rule. Only place to buy meats, cheese and dry goods.
I have the same meat rules, i work in the Costco distribution center and Ive handled the meat from all the 70ish Costco’s in Southern California
and Hawaii and now I work in the depot in Houston and handle all the meat of Costco in southern Texas and Louisiana and I can promise you we take care of our meat
❤️ Costco their buyers know me better than I know myself. More companies should adopt their model to care for employees.
I like Costco even more after watching this...
He is a rare CEO
This is a company that will excel and grow for many years to come.
Awesome company, I’d be proud to work for them if I were an employee. Why don’t other companies try to replicate this model?
A happy employee right here. Thank you Costco for taking good care of us.
I like the fact that the CEO is wearing his work ID for an interview.
I trust Costco brand than I trust Amazon, or Walmart. When buying at Amazon, it hard to know if you are buying from Amazon or third party, each has different quality, warranty or return policy
Costco deserves all the success in the world for how they do business.
This guy said "lower prices" 149 times.
how many times does he say "YA KNOW?"
And? BFD.
Like if you’re a Costco employee! #warehouse118
#735!
222
Warehouse #48 Van Nuys ,CA
#1039!!
#10
Good for them. I'm a loyal customer for many reasons, including how they treat their employees. Worth every $ spent.
This CEO's sincere modesty is positively refreshing, and a refreshing contrast with that of Bill Gates or a Mark Zuckerberg.
Costco is one of the few stores i enjoy going to. Cheap bulk products, quality generic brand (Kirkland), free samples, food court, cheap gas. Not much to dislike all of it makes the $60 a year worth it.
I could listen to this guy for hours, he comes across as a nice person that you can believe. Great company.
Love Costco! It has a selection of meat including usda prime beef and other products you just can’t get at the grocery store or even online for the same price.
My wife works at costco and I can vouch for the values, wages, benefits and low turnover. They treat their employees like family, which in turn creates a great shopping experience for its members. Costco is truly a blessing.
WHAT A LEADER!!! This guy is a true example for all CEOs
Great leadership, accountability, treat their team as an invaluable asset. I’m a loyal customer and will continue to make the 80 mile round trip drive to our store to stock up. Other companies need to learn from their example!
He said that right pay your employees better you'll get much better results and steady employees
Good on Costco for paying its employees a decent wage with benefits. $25/hr is about $52,000 per year. The magic number for most families in the US according to Forbes is $70,000 per year. This is what Gravity Payments did from 2015. It's been so successful with increasing revenues, profits, decreasing absenteeism and staff turnover that President and CEO Dan Price is going to do the same thing with its newly acquired office in Boise, Idaho.
The only complaint I have with Costco is the amount of packaging garbage and food waste it creates. They wrap everything including clamshells for tomatos (or something like that). Customers usually buy so much in bulk that a lot of food goes rotten in the back of the refrigerators of North America.
I have to say Im getting ready to retire from teaching and im still a young guy
After watching this I really want to try working for Costco. I'am finding I trust this man Craig Jelinek even though hes making over 8 million in salary as CEO they are treating employees to giving them 29.00 an hour. My friend Blaise works for Sams running 2 departments and is only making 21.00 an hour. Who would want to work for Sams Club ? Not me.
Harvard should do a business review class based on this company! Hats off!
Love Costco taking care of their employees, unlike Walmart scumbags...
Hands down one of the best businesses in the world
I’m like a kid in a candy store when I go to Costco. Glad to hear they treat their employees well and offer great value for their customers.
Costco is the Chic-Fil-A of grocery stores.
Minus a jerk at the top of the company
$25/hr average pay? 10yr employees average $29/hr? But I thought if you pay your employees more you had to pass the expense on to the customers? But but but how does the top 100 employees still get there $2 million salary and $50 million bonus even though the company didn't make that much profit like the rest of the big companies *cough GM cough*?
I don't know maybe if the top 20-100 employees didn't make over $500K and have 5-20 million bonuses I guess you can pay your employees $20-$30/hr AND give them benefits, retirement, healthcare, vacation, holiday pay AND still make a lot of money for ALL employees not just the top ones and employ thousands, (even hundreds of thousands world wide)? Who would have thought it? I don't know maybe all the middle class that have been begging for a descend pay raise?
It's true. The employees at all the costcos I've gone to go above and beyond. The other day I was by the seafood fridge. There were no shrimps left. I saw a guy organizing produce and asked him if he could help. He told me he couldn't because he didn't have the proper gear to go into that area but he will find someone for me. A minute later a dude came out with 5 racks full of shrimps. This happens all the time. Employees are exceptional.
'You know' I like this guy
Everybody loves Costco for a reason
Have been a member since one opened near us and always been a strong shopper. Great product, service, prices. Love Costco
I'm so proud to work for this company 🙌🔥👍🙌
The mistake that most companies are making in pushing down wages is the sacrifice in talent that cannot be quantified. But the loss in service is palpable. A company IS only as good (and happy and loyal) as its people because a company IS its people.
Sad how people are happy working at Costco or any place really. That’s why I have my own business, I don’t like knowing someone on top of the chart is making 10X and not working as hard as me. To each their own
I had a surprise visit from Craig Jelinek, President & CEO of #Costco, at my #SearsHometown. He's down-to-earth, personable, & is a solid listener with a good sense of humor 😃... which was very welcome given that he rolled in with 5 vehicles & an entire team of executives... while I was wrapping up with our local Fire Marshall. I've never considered working for Costco as it's a 45 minute commute, but after meeting Craig personally... I would love to work for him. He is so humble & responsive. I felt heard & understood, & he had someone in our region call within 20 minutes to follow-up with my concerns & suggestions for the newly acquired Costco Innovel. Impressive.
4:42 They are in Issaquah, WA store. I have been there and studying the luxury wine on the wooden counter.
What a gentleman. Would love to work under his leadership.
Humility goes a long way in this world
I love Costco wholesale and will keep paying annual fee even if I don't shop a single product so that I can support the vision of this company . This a good company
Most Honest Company in America I think.
It actually pays NOT to be greedy! 👍
I'm a new investor. As far as stocks go. Costco is my first and greatest love. I bought a share. At first I was all what am I doing? Am I doing the right thing? Then I was ready to buy another share. After seeing this. I want to buy a few more.
diversity portfolio!! don't put all eggs in one basket!!