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.
Fool contributor Anders Bylund holds no position in any of the companies discussed here, nor does he shop at warehouse stores these days. They're just too darn far away from his home out in the boondocks. You can check out Anders' holdings if you like, and Foolish disclosure will make a bull out of any bear, origami-style.