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Costco: Companies
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The market's view of Costco speaks volumes about the so-called Wal-Martization of the U.S. economy. True, the Bentonville (Ark.) retailer has taken a public-relations pounding recently for paying poverty-level wages and shouldering health insurance for fewer than half of its 1.2 million U.S. workers. Still, it remains the darling of the Street, which, like Wal-Mart and many other companies, believes that shareholders are best served if employers do all they can to hold down costs, including the cost of labor.
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The upside to Costco’s high employee costs are increased employee loyalty and motivation. Costco has a lower employee turnover than the competition, which saves them money on employee recruiting and training costs. In addition, Costco avoids the negative exposure regarding employee wages and benefits that current surrounds companies such as Wal-Mart.
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Costco Wholesale Corp. expects that it can meet Wall Street's third-quarter earnings estimate of 65 cents per share and $2.99 for the full year. The company plans to open 16 to 18 new warehouses by the end of the current fiscal year, which ends Aug. 31.
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To help soften the blow, Costco plans to extend the warranties on televisions and PCs for a total of two years. The company ... plans to roll out a technical support line to help customers who may be returning items such as iPods because they are frustrated that they can't get them to work correctly, Galanti said.
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Despite Costco's impressive record, Mr. Sinegal's salary is just $350,000, although he ... received a $200,000 bonus last year. That puts him at less than 10 percent of many other chief executives, though Costco ranks 29th in revenue among all American companies.
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Costco Wholesale Corp. is predicting another record year for e-commerce sales. In fiscal 2008, the company expects web sales to reach more than $1.5 billion, an increase of at least 25% from web sales of $1.2 billion in fiscal 2007.
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