On Thursday, retail giant Costco announced that it was limiting the purchase of certain essential commodities including toilet paper, paper towels and bottled water. As the holiday season approaches there is a shortage of several products due to a combination of reasons. Many retailers are seeing shortages from consumer goods, to shoes, to vehicles.
Costco’s Chief Financial Officer (CFO) Richard Galanti told Wall Street analysts in a call that the company was putting a few limits on important items including
- bath tissues
- roll towels
- signature water
- High-demand cleaning related skews.
He mentioned both supply chain issues as well as COVID related demands. The rise of the delta variant has once again caused people to start hoarding on certain items. During the rise of the pandemic last year, there was a huge shortage of goods. As the delta variant is surging there are stocks of many goods but they are unable to reach stores.
Although some products are in ample supplies, there is difficulty in getting them to store shelves due to a combination of factors. The CFO also mentioned the factors that were pressuring supply chains and ports and included
- port delays
- container shortages
- COVID disruptions
- components shortages
- raw material shortages
- ingredients shortages
- labor cost pressure
- Truck and driver shortages.
Galanti also spoke of shortages or delays in consumer goods on appliances and electronics such as computers, tablets and video games as there was a worldwide shortage of computer chips.
Costco has also increased its spending on transportation and labor. It has already chartered three ships for the following year. These vessels will carry goods between the U.S., Canada and Asia. They will have a capacity of 800 to 1,000 container loads in each trip.
West coast ports have faced traffic as container ships are waiting to dock at Los Angeles and Long Beach. There is congestion at the ports because there is a lack of labor… The delta variant surge has also created labor shortage and longer times to clear goods due to protocols.
Costco shares rose by less than one percent Thursday, evening. The company has a market value of $200.16 billion.
