Costco says trade war will make 'prices will go up on things'

By RetailFOXBusiness

Costco warns shoppers over possible price hikes due to tariffs; Dollar Tree adds alcohol to its stores

Morning Business Outlook: Costco announces the U.S. trade war with China will lead to higher prices; Dollar Tree, owners of the nationwide discount shopping chain Family Dollar, say about 1,000 of their stores will begin selling alcohol.

Costco Wholesale Corp. said prices will increase due to the trade war between China and the U.S. and the tariffs imposed on Chinese goods.

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Costco’s CFO Richard Galanti said in a post-earnings call Thursday with analysts that the “situation is pretty fluid,” Reuters reported.

“At the end of the day, prices will go up on things. What’s interesting is that it’s hard to predict what the impact is,” Galanti said.

The company, which offers items in bulk for lower prices, said it was considering sourcing outside of China.

Galanti said the company was doing what it could to speed up the shipment of items before some tariffs went into effect, Reuters reported. It was not immediately clear how the tariffs would affect prices on imports from China. Those include luggage, furniture, and bicycles, Galanti said.

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“We want to be the last to raise them. And when prices are going down, we want to be the first to lower them,” he continued. “We’re not afraid to use some of those monies to again drive business.”

The retailer was the latest to predict that the tariffs would lead to higher prices. Earlier this month, Walmart warned shoppers that it will raise prices to offset the impact of the Trump administration’s tariffs on China.

On Thursday, Costco announced its operating results for the third quarter and the first 36 weeks of fiscal 2019, ended May 12, 2019. Net sales for the quarter increased 7.4 percent, to $33.96 billion, from $31.62 billion last year. Net sales for the first thirty-six weeks increased 8.3 percent, to $102.90 billion, from $95.02 billion last year.

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The trade war escalated earlier this month after the Trump administration raised tariffs on $200 billion worth of Chinese goods to 25 percent from 10 percent.

Costco currently operates 773 warehouses, including 536 in the United States and Puerto Rico, 100 in Canada, 39 in Mexico, 28 in the United Kingdom, 26 in Japan, 16 in Korea, 13 in Taiwan, 11 in Australia, two in Spain, and one each in Iceland and France.

It also operates e-commerce sites in the U.S., Canada, the United Kingdom, Mexico, Korea, and Taiwan.

 Fox Business’ Thomas Barrabi and The Associated Press contributed to this report.

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