Supply Chain Delays to Persist for Rest of Calendar 2021, Costco CFO Says
Strong demand contributed to Costco’s 38.2% e-commerce sales increase for the fiscal third quarter ended May 9, but port delays “are continuing to have an impact,” Chief Financial Officer Richard Galanti said on a May 27 earnings call. “The turnaround…
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of a container hitting the U.S., delivering its contents and being back at the U.S. port to head back overseas” has doubled to 50 days compared with a year ago, he said. “Chips shortages are impacting many items from an inflation standpoint, some items more than others,” Galanti said. “We continue to work to mitigate cost increases and supply chain delays in a variety of different ways,” mostly by “front-loading” orders of many items, he said. “The feeling is that this will continue” at least for the rest of calendar year 2021, he said. Galanti estimates that about 70% of the warehouse club’s “big and bulky” items is now being delivered through the Costco Logistics trucking fleet, he said. “Some of it was being delivered by third parties that were doing fine, but now we're doing it ourselves,” he said. Costco Logistics “is continuing to grow very handily” in fulfillment of articles for the home, including big-screen TVs, he said.