Costco Announces it Will Share Extra Profits From Tax Cuts With Employees

By Sahid Fawaz

There is yet another reason to choose Costco over Sam’s Club and Walmart.

The Seattle Times reports:

“Many retailers have announced plans to spend their tax-cut windfalls on one-time employee bonuses or more enduring wage increases. As retail pay is boosted, Costco intends to keep compensation for its more than 239,000 workers ahead of the pack, executives said Wednesday as the company reported its quarterly results.

Costco’s tax benefit in its fiscal second quarter was $74 million or 17 cents a share. That helped the Issaquah-based retailer post $701 million in profit, $1.59 a share, and beat Wall Street analysts’ expectations. Costco sales and membership fees were up 10.8 percent to $33 billion in the quarter, which ended Feb. 18 and included most of the holiday shopping season.

The company’s effective tax rate for its fiscal second quarter, which straddled the calendar year, was 27.7 percent, said chief financial officer Richard Galanti in a conference call Wednesday afternoon. That’s down from 35.6 percent during the same quarter of its 2017 fiscal year.

The company plans to invest the tax savings in its employees, lowering prices, and other activities that he said will attract more customers and increase sales volumes, ultimately translating to greater profits.

“Some will fall to bottom line, yes,” he said. ‘We also take care of our employees.’

He provided few details of what Costco employees could expect, but said it would not be a one-time bonus. The timing of the benefit would be ‘in the next two months,’ he added.”

For the rest of the story, visit the Seattle Times.

 

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