David Gardner: Jim Sinegal is the CEO of Costco
Jim Sinegal: David, thank you. It is a pleasure to be with you guys again.
David Gardner: Thank you so much. Jim, we have seen some strong retail numbers in recent days, and I include of course the latest ones from your company, Costco. In fact, over the past 12 months, shares of your stock have risen about 40% in value; your earnings are up more than 20%. How is business at Costco now, Jim?
Jim Sinegal: Business has been pretty good. You saw the numbers for October. We had an 8% comp increase on our warehouses around the world. We are pretty pleased with that. That was a good indication of strong October. We will see what happens as we get into November, but generally as we lead into the fall season with good numbers in September and October, that kind of buoys our spirits for the next two months.
David Gardner: Do you have a prediction about the holiday season ahead, relative to other holiday seasons?
Jim Sinegal: Well, you know, our earliest indication was that some of the seasonal bits, the toys and the trim-a-home and the specifically seasonal-type of merchandise for a holiday, was starting off good. That is generally a barometer that we use to measure how we will be doing when we get into November and December. So we feel pretty good. Our food sales have been good as well, so we would expect that the consumer is going to want to spend time with the family this holiday. They have just gotten past the election, and I think the anxieties about Iraq are going to probably bring people closer together.
David Gardner: So it sounds like, Jim, you are saying it is OK to now stop thinking about politics and, I don't know, start speaking to our family again?
Jim Sinegal: Well, I think we have spent enough time on politics, and it is time to start thinking about our families and about the season. So I think that is the case. I would agree with that.
David Gardner: ... Jim, how do you respond to an analyst charge earlier in the week that your stock is overpriced and unlikely to outperform the market going forward?
Jim Sinegal: Well, I think that probably if you look out there you are going to find this thing evenly split about our stock, some saying positive things and some saying things that they feel that it is overvalued. We can't make ourselves crazy about that, David. We have to run our business, and we try not to focus on that because that is not our intention. Driving stock up from one day to the next is not what we are about. We are about building a good company and performing for the long term. I know everyone says that, that sounds trite when I repeat it that way, but that is and has always been our attitude about our business. If we do the right things, the stock price will take care of itself, and our shareholders will be rewarded.
David Gardner: And they have been, and your stock has done wonderfully. I have to assume, Jim, it gets kind of addictive over the years, watching the stock do as well as it has; so maybe this one from the true confessions file of Jim Sinegal. Jim, how often a day do you quote COST on the Nasdaq?
Jim Sinegal: I look it up very seldom because I don't have the wherewithal and because I am traveling most of the time. This time of year I am traveling virtually every day. This is one of the few days that I am in the office during the months of November and December. I think I have a total of six days in the office these two months.
David Gardner: Jim Sinegal, when you travel for Costco, where are you traveling and why?
Jim Sinegal: Well, I am going out to visit the Costcos, and I just got back from a trip where I was visiting all of the Costcos in Florida and then Puerto Rico and then up in New York. I will be leaving tomorrow and visiting Costcos up here in the Northwest, which will be in Washington and Oregon.
David Gardner: What is your approach on these, Jim? Is this a secret trip where you just kind of stumble in as a given customer, or is there pomp and circumstance because they all know the big man is coming?
Jim Sinegal: Well, I think I might fool the first one. I don't fool anyone beyond that. That is not the purpose. I like to get out and see what the places look like, and I like to see our employees and see how the merchandise is flowing in, and obviously, when you are in the retail business, you like to hear the cash registers ring.
Stay tuned for Part Two of our interview tomorrow.