by Jamie Dlugosch | June 12, 2009 11:40 am
Will someone in the executive suite at Costco (COST[1]) get a clue, please? With one of the greatest opportunities in decades to separate yourself from the competition, you are puking all over the place.
Today, we learned that same-store sales at Costco have fallen by a whopping 7%.
To be fair, that sensational headline is mostly due to lower gasoline prices and a weak dollar, but even so the discount retailer saw sales drop by 1%.
This economy is separating the men from the boys, and it should be obvious to anyone paying attention that Costco is being operated by boys. At a time when discounts rule the day, Costco should be increasing its business. Instead, it is are losing the game, and the sad part is management is clearly playing the blame game.
“Oh, our poor performance is because of a weak dollar. Oh, our performance is lacking because of lower gasoline prices.”
Please, cry me a river! These weak excuses are merely an attempt to deflect attention away from management ineptitude. These men and women are working rather hard to protect their salaries and perks.
I have no doubt about it!
One of the questions that I am asked most frequently is how do you know when a stock is dead. It is easy to identify a loser after the fact, but how do you do it before you lose your money?
The answer I give is to pay attention to management. How do they perform during a crisis? What happens when mistakes are made?
I want to buy the company that kicks some serious tail during a crisis. A take-no-prisoners approach is fine by me. Capitalism is about winners and losers. And I want to own the winners.
Late last year in the depth of this current crisis, Costco started to show its weaknesses. In the six months that followed, the evidence presented has supported that view. Unlike rival Wal-Mart (WMT[2]), Costco stumbled during this period.
Making matters worse are these lame excuses. How about stepping up to the plate with some accountability? It is ok to make a mistake, but you need to admit it before you can fix it.
That is not happening with Costco. I’m outta here, and you should be, too. Don’t wait for this management team to fix the problem. It is not going to happen.
Oh, by the way the stock is down some 4% on the news.
While Costco stumbles along, Wal-Mart is still offering investors stunning value.
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