Costco takes a slow and steady approach to its business. It generally waits to make changes until its rivals have already been doing something new for years.That’s not because the chain is stubborn or cheap, but because its management fully understands why its members join the warehouse club. Costco (COST) customers don’t shop at the retailer because it has the latest technology. They shop there because the chain offers the lowest prices.Related: Costco faces lawsuit over hugely popular productMembers, of course, like the cheap food court prices and enjoy the free samples, and many love the treasure-hunt aspect of shopping at Costco. Those things, however, are generally secondary to the basic promise the chain makes to its customers to do everything possible to keep prices low.That’s also not to say the retailer never changes. For years, Costco had no e-commerce business, and even after it launched a website, it kept its offerings pretty limited. Now, the chain offers same-day delivery through Instacart, a move that enables it to match Walmart and Target without taking on any additional expense. That’s typical of how the warehouse club operates. Costco watches the market and makes the changes it needs to in order to compete. It generally does that well after its rivals have worked out the kinks and fully proved customer demand.It’s a careful approach designed to keep expenses low so the company can offer the lowest prices possible. Costco isn’t just careful in how it spends money; it has also had remarkable stability in its executive ranks. That has changed recently as the company named a new CEO in January, a planned transition from longtime leader Craig Jelinek to his long-expected successor, Ron Vachris.Now, Costco has made another executive move that was less expected.
Jellinek has been a vigorous defender of the chain’s $1.50 hot dog and soda deal.Image source: Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images
Costco’s public face steps down While Jelinek was the CEO of Costco for 11 years, he did not host its quarterly earnings calls. He left that role to longtime Chief Financial Officer Richard Galanti, who hosted the calls by himself.That’s a more important public-facing position for Costco than it would be for other retailers because the warehouse club rarely has executives make comments outside those calls. Basically, Galanti updated the media and stock analysts during those quarterly calls, which served as the company’s only comments on key issues like its membership prices, special dividends, and how it’s handling issues like inflation and retail theft. Because public comment from the company overall is scarce, Galanti has become one of the most-quoted retail executives in the world. His earnings-call comments are regularly pored over and used as the source for thousands of stories each quarter.Galanti has seemed like an immovable fixture at Costco, having served as CFO for nearly 40 years. That will change, however, as the longtime financial boss has decided to step down as of March 15.Costco adds a Kroger executiveWhile Galanti stepping down is surprising, the choice of his successor is downright shocking because Costco has named an outsider to the position. It’s a rare move for a chain that has generally promoted from within: Vachris worked his way up from being an in-store worker to the CEO role.Galanti will be succeeded by Kroger (KR) CFO Gary Millerchip. The outgoing CFO will remain with Costco as a consultant through January 2025 and he will continue to serve on the company’s board. Millerchip has spent the past 15 years at Kroger after working in the banking industry for the previous 20 years. Kroger has named its chief accounting officer, Todd Foley, as interim CFO and plans to name a permanent successor for Millerchip later. Galanti has not made a public statement about why he decided to step down.Related: Veteran fund manager picks favorite stocks for 2024