Private Label Buyer

Costco CFO Says Kirkland Strong In Fresh Foods

October 15, 2012

With sales up again in the fiscal fourth quarter of 2012, Costco Chief Financial Officer Richard Galanti told analysts that the company’s private label penetration in fresh foods was on the rise.

The warehouse club, which is the third-largest private label retailer on the latest PLBuyer Top 35 list, said last week that same-store sales for the fiscal fourth quarter rose 5 percent from a year ago. Earnings rose 29 percent to $1.39 a share, up from $1.08 a share in the fourth quarter of 2011.

Fresh foods sales rose in the mid to high single digits in the quarter, Galanti said, with the strongest results in deli and produce.

“I think a little of it, not a lot of it, but a little of it, has to do with increasing penetration in some fresh foods with the KS, the Kirkland Signature name,” Galanti said. “Some of it has to do with the comment I mentioned earlier about organic. These are small things, but there’s more and more of them. If we can take $20 (million) or $30 million dollars out of a few hundred million dollars of ground beef sales from a highly competitive basic ground beef line, and put it into organic, that’s good for us because we can sell it, because we have that kind of member.

“It’s good for us because that member sees, let’s just say a higher price point item, but the member sees an even greater relative value because those are the items that are as competitive out there. So we can provide the customer more and do more.”

Galanti said that softline sales were the standout category for the quarter, with small electronics and domestics leading the way. Sales were up in the high single digits from a year earlier.