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Costco is implementing new consumer limitations on purchases of household essentials including toilet paper, paper towels, and Kirkland bottled water as the company has seen an increase in demand due to a surge in the delta variant and supply-chain complications.
Costco has been dealing with significant issues centered around supply-chain complications and inflation according to the company’s Executive Vice President and Chief Financial Officer Richard A. Galanti. Galanti informed analysts of the issues during a conference call, transcribed by Alpha Street, regarding Costco’s fourth-quarter earnings on September 23:
From a supply chain perspective, the factors pressuring supply chains and inflation include port delays, container shortages, COVID disruptions, shortages on various components, raw materials and ingredients, labor cost pressures and trucker and driver shortages — trucks and driver shortages. Domestically, anecdotally rather from a — even on a domestic side, various major brands are requesting longer lead times. Some cases difficulty in finding drivers and trucks on short notice. Lead times on ingredients and packaging have been extended in some cases.
The article goes on to state the following:
After noting complications regarding supply chains and inflation, Galanti announced, “Also we’re putting some limitations on key items like bath tissues, roll towels, Kirkland Signature water, high demand related SKUs related to the uptick in the Delta related demand.”
“Inflationary factors abound, higher labor costs, higher freight cost, higher transportation demand, along with container shortages and port delays, increased demand in certain product categories,” Galanti said.
Galanti explained that shipments that usually take 8 to 12 weeks are now taking 16 to 18 weeks, and that the trend will probably continue into 2022.
Significant delays were noted for receiving shipments of furniture, children’s toys, seasonal items, and computer/electronic chips.
The Epoch Times reported:
Seeking to ease some of the supply pressures, Galanti said Costco has chartered three ocean vessels and leased thousands of shipping containers for use on those ships for the next year to ramp up shipments between Asia and the United States.
Higher costs of plastics and resins have led to many items in Costco’s offering—such as trash bags, plastic cups, and pet products—to go up by between 5 to 11 percent, he said.
He estimated that the overall price inflation of products Costco is selling to be in the 3.5 percent to 4.5 percent range. This is an increase from the 1 percent to 1.5 percent range he estimated in March and the 2.5 percent to 3.5 percent range he projected in May.
Bath tissues, roll towels, Kirkland signature water and high-demand cleaning products may see purchase limits https://t.co/PhGWobCpu1
— FOX 10 Phoenix (@FOX10Phoenix) September 24, 2021
#SupplyChain problems are pushing #Costco to reintroduce purchase limits on key household items like bottled water and toilet paper, according to the company’s CEO, who cited factors like port delays, driver shortages, and general “COVID disruption.” https://t.co/SWLYrh733f
— The Epoch Times (@EpochTimes) September 24, 2021
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