Costco CEO Highlights Consumer Strength Following 20% June Sales Jump: 'Things Aren't So Bad'

Zinger Key Points
  • "Overall, I think the consumer is not doing bad," says Craig Jelinek, CEO of Costco.
  • Costco is not considering raising the price of its membership or its famous hot dog combo.

Costco Wholesale Corp COST sales jumped 20% in June and CEO Craig Jelinek said he doesn't see any signs of a slowdown anytime soon.

"We're a volume business. We're not a margin business and we drive a lot of sales. That's all we know, that's what we do," Jelinek said Monday on CNBC's "Squawk On The Street."

What To Know: While traditional retailers like Walmart Inc WMT and Target Corp TGT have been plagued by excess inventory and overstaffing issues, Costco has seemingly skated through supply chain disruptions unscathed. 

"It's not the same business. We are a membership model. We're limited SKUs and we continue to try to drive volume in fewer items," Jelinek said.

See Also: Telsey Advisory Says Costco Is 'Executing Well'; Sees Notable Upside

The hard goods that are seeing a little bit of weakness are items that saw increased buying during the COVID-19 pandemic. So it might just be that consumers don't need to repurchase those products, he said. 

Several other product areas are seeing increased demand despite steeper prices, which shows the consumer is still somewhat strong. 

"Overall, I think the consumer is not doing bad, as you can see unemployment is down significantly. If people want to work, they can work, so my view at the moment: things aren't so bad," Jelinek said.

With the consumer showing strength in the wake of price increases, Costco isn't considering raising its membership fees at the moment, Jelinek said. 

What About The Famous Hot Dog? Despite rising inflation, Costco won't be raising the price of its hot dog either. The $1.50 hot dog and soda combo was launched at Costco in 1985 and is still available today.

Although it's believed that Costco takes a loss on each hot dog combo sold, the famous deal helps to get shoppers in the stores and keeps them coming back. 

When asked if there was "any inflationary environment" in which Costco would raise the price of its hot dog, Jelinek simply responded, "No."

COST Price Action: Costco has traded between $612.27 and $403.16 over a 52-week period.

The stock was down 0.73% at $497.90 at press time, according to data from Benzinga Pro.

Photo: Mike Mozart from Flickr.

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