Supply Chain Delays to Persist for Rest of Calendar 2021: Costco CFO
Strong consumer electronics demand contributed to Costco’s 38.2% e-commerce sales increase for fiscal Q3 ended May 9, but port delays “are continuing to have an impact,” said Chief Financial Officer Richard Galanti on a Thursday earnings call. “The turnaround of…
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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,” said Galanti. “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 2021, he said. Galanti estimates about 70% of the warehouse club’s “big and bulky” items are 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. "We're seeing 30% and 50% increases on items within some of those categories."