One of Larry's gripes about Costco
And I don't think my esteemed opponent fully understands the nature of that sales-returns allowance. Costco recently changed its return policies to stop the all-too-common practice of buying big-ticket items like a nice plasma TV and then returning it right after the Super Bowl, or when the thing breaks eight years later. Thus, sales last quarter were reduced as a result of posting an increase for the sales-returns reserve balance. However, the old policy was a free, eternal product warranty, and I'm glad to see that much-abused program go away. While it might have affected last quarter, I believe the new policy will benefit the company in the future.
In general, Larry is picking nits like an Insect-O-Cutor picks off gnats. The margin decline is glacially slow and could easily be reversed if management had a mind to do so. And BJ's
Costco is a huge warehouse retailer, and to me, it beats its competition among rival warehouse club operators. While Costco's forward earnings multiples aren't as attractive as those of its rivals, I wouldn't consider the stock expensive, since the company runs a superior business that deserves higher prices.
Love the company; love the stock.
Check out the other arguments in this Duel, and then vote for a winner.