Costco stock up on CEO plans, August sales results
Shares of Costco rose Thursday after the warehouse club chain announced that its chief operating officer would take...
NEW YORK — Shares of Costco rose Thursday after the warehouse club chain announced that its chief operating officer would take over as CEO in January and it also reported sales numbers that topped Wall Street expectations.
Industry analysts believe COO Craig Jelinek is a good pick to lead the company and no one was caught off guard by the change, which often leads to a sell-off in company shares.
On Wednesday, Costco said Jim Sinegal would step down as CEO at the start of 2012, but would remain with the company through January 2013 to serve as an adviser and assist with the transition.
Jefferies analyst Daniel Binder said that Sinegal's decision is not a shock, "given how well it was telegraphed over the last 18 months."
"We are never completely comfortable with situations where a key leader steps down, but Mr. Jelinek has the right experience and was groomed to take this role," Binder wrote.
Costco reported Wednesday that revenue at stores open at least a year climbed 11 percent in August, beating Wall Street expectations. Analysts surveyed by Thomson Reuters predicted the figure would rise 9.3 percent.
Revenue at stores open at least a year is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.
Baird's Peter Benedict said Costco's traffic is still best-in-class, with its average ticket benefiting from inflation. The analyst explained that the company's higher-income customer base and the value its bulk products provide leaves Costco well-positioned in the current economic environment.
Costco stock closed up 94 cents, or 1.2 percent, at $79.48, after earlier rising as high as $80.91. Over the past year, the stock has traded between $56.76 and $83.95.
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