In Person: Costco president Craig Jelinek keeps a low profile
Craig Jelinek opened Costco's sixth warehouse in the 1980s, and now as company president is looking at new stores in Paris and Madrid, Spain.
Seattle Times business reporter
Craig JelinekCOSTCO'S PRESIDENT and chief operating officer:
Pay: Earned $2.3 million, including stock awards, in the fiscal year ended last August.
Before Costco: Grew up near Los Angeles and worked through college for the discount chain Fed-Mart, which was founded by Sol Price and closed in the early '80s.
At Costco: Started in 1984 and opened its sixth warehouse, in Tukwila. Opened stores in Nevada and California before Costco merged in 1993 with Price Club, also founded by Sol Price. Jelinek then ran the Northwest region and in 2004 became the head of merchandising.
Previous In Person profiles
If hot dogs and humility are hallmarks of Costco's top brass, Craig Jelinek has it nailed.
Speaking to Seattle University students last month, he mentioned Costco's $1.50 hot dogs more than once, an enthusiasm he shares with co-founder and CEO Jim Sinegal.
Jelinek also made jokes at his own expense, at one point saying how embarrassed he was about the noise he created by repeatedly tapping on the little microphone clipped to his shirt. "I work in the comedy club at night," he kidded.
Nobody official has said that Jelinek is in line for the CEO job, should Sinegal ever retire. But a little over a year ago, he assumed one of Sinegal's titles — president — along with the chief operating officer hat.
"It seems like they made these management shifts with succession in mind," said Dan Geiman, who follows the company for McAdams Wright Ragen.
Jelinek started at Costco in 1984, and at different times has opened stores, overseen the Northwest region and led merchandising. Now he helps run the whole company and accompanies Sinegal, 75, to the opening of every Costco warehouse in the world.
Unlike most Costco executives, Jelinek has been unavailable for interviews.
Some Wall Street analysts have never even met him. One who has, David Schick, of Stifel Nicolaus, said Jelinek fits perfectly into Costco's "uniquely patient" executive crew.
"Craig is very focused on the same things Jim Sinegal is," Schick said.
And what's that? "Costco has a very long-term view" when it comes to low prices and margins, as well as the way it treats employees. That's rare, he said, but "it doesn't seem that the company spends a lot of time worrying about whether that's right or not; they're convinced that's right based on their track record."
Here's what the somewhat-elusive Jelinek said during a talk about Costco's international strategy to business-school students at Seattle University, where he was recently named a trustee:
On taking over
"I haven't taken over. Let's get that squared away," he said to one question about the challenges of succeeding Sinegal. "There's a lot that could happen before that could happen."
He also made it clear that Sinegal is irreplaceable. "If I happen to be blessed to take over for Jim Sinegal, I can only be Craig Jelinek."
Then Jelinek listed a few of his assets: knowing Costco's culture, helping employees grow and succeed, and "putting on my pants one leg at a time like everyone else."
Many of Costco's best-performing stores are in Asia, where "growth over the next three to four years is going to be very aggressive," he said. Its 22 warehouse stores in Japan, South Korea and Taiwan represent more than $2.5 billion in annual sales (of Costco's total $78 billion), and the company expects to roughly double its locations in those countries in the next few years.
Costco's Asian warehouses rank among the top sellers for many of its food categories. "The hot dog is famous everywhere," Jelinek said.
Only two of Costco's top 10 warehouses for service delis are outside Asia. The same is true for meat and fish sales, and Asian warehouses sweep the top 10 for baked goods.
Jelinek echoed Sinegal's concerns about China, where Sinegal has said the company does not plan to open any time soon. Sinegal tells a story about Costco people scouting a site in China that already had a factory on it. When they asked what would happen to the factory, the Chinese officials said not to worry, it would be taken care of.
"I'm not convinced China is a good place to go do business at the moment," Jelinek said.
On other foreign markets
He touted the success of Costco's first warehouse in Australia, which opened in 2009 and last year posted higher sales than expected. The company plans two more stores there this year.
Next up: Paris, although he called it "extremely expensive," and Madrid, Spain, where the economy is not great but which presents opportunities for Costco "based on some of our success in Mexico."
Melissa Allison: 206-464-3312 or email@example.com
|By country, the number of warehouse stores:|
|U.S. and Puerto Rico||*424|
|* Includes 29 in Washington. Source: Company's quarterly report|
The Morning Memo
The Morning Memo jump starts your day with weather, traffic and news