Costco exec says some costs are falling and he sees a 'light at the end of the tunnel'

Costco exec says some costs are falling and he sees a 'light at the end of the tunnel'
The exterior of a Costco.Kena Betancur/VIEWpress/Getty Images
  • Costco's Chief Financial Officer shared his thoughts on inflation at the company's earnings call.
  • Richard Galanti said that there is now a "light at the end of the tunnel" in regards to inflation.

When it comes to inflation, Costco Chief Financial Officer Richard Galanti is seeing a light at the end of the tunnel.

In the warehouse chain's Thursday earning call, Galanti used the phrase several times while discussing the company's performance with analysts. His comments — paired with the fact that inflation seems to have peaked in June — indicate that consumers may begin to feel less of a pinch from rising costs in the near future.

Cowen and Company analyst Oliver Chen asked specifically about the "light at the end of the tunnel," regarding the initial signs that inflationary pressures are weakening.

"Anecdotally, when we talked to the buyers, they're starting to see a few examples, whether it's something like outdoor patio furniture or barbecue grills where steel prices are coming down," Galanti said.

He said that once freight and raw material costs started to decline, Costco was proactive about asking suppliers for price reductions.


"And so I think in part because of our limited selection — our limited number of SKUs and a huge volume, I think our buyers know pretty darn well a lot of the cost components of these things," he said. "And that, I think, bodes well for us."

The CFO noted that it will be a "slow road" ahead in terms of high prices declining. Experts have predicted that it could take time for consumers to notice considerable price drops. But Galanti added that developments like container rates declining and container shortages and port delays waning will prove to be good news for businesses even beyond Costco.

"At least we're seeing the things going — starting to go in the right direction," he said. "Hopefully, that bodes better for not just us, but everyone."

Galanti said that "regarding inflation," his company has seen "minor improvement in a few areas."

"But all in, pressures from higher commodity prices, higher wages and higher transportation costs and supply chain disruptions, they're still present, but we are seeing just a little light at the end of the tunnel," he said.