(Updates with comment from Jelinek in sixth paragraph.)
Sept. 1 (Bloomberg) -- Costco Wholesale Corp., the largest U.S. warehouse-club chain, appointed Chief Operating Officer Craig Jelinek to succeed Chief Executive Officer Jim Sinegal, who will step down on Jan. 1 after more than 20 years.
Jelinek has been at Costco for almost 28 years, the Issaquah, Washington-based company said yesterday in a statement. He started in 1984 as a manager of one of the company’s warehouses, and went on to serve in several management positions, including head of merchandising.
Sinegal, 75, founded Costco Wholesale in 1983 with Chairman Jeffrey Brotman and took over as CEO five years later, after a merger with competitor Price Club. Under Sinegal and Jelinek, 59, Costco’s stock gained 10 percent this year, more than double the gain of the Standard & Poor’s 500 Consumer Staples Index.
“Jelinek has seriously big, big shoes to fill,” Brian Sozzi, an equities analyst for Wall Street Strategies Inc. in New York, said yesterday in an e-mail. “I would compare it to the torch being passed to Lou Gehrig from Babe Ruth. This is a man who pioneered how we consume goods and services on a daily basis, bringing an entirely new retail model to life.”
Costco rose 94 cents, or 1.2 percent, to $79.48 at 4 p.m. New York time in Nasdaq Stock Market trading. The S&P 500 Consumer Staples Index has gained 4.5 percent this year.
The retailer will focus on improving its e-commerce shopping site and expansion in Asia, Jelinek said today in a telephone interview. The company has 24 of its 592 stores in Asia with none in China. The company has the potential to reach 1,000 total stores in the next 10 years, he said.
“We want to continue to figure out how to better reach our customers,” Jelinek said.
Sinegal, who will seek re-election to Costco’s board in January, will serve as an adviser through January 2013. Jelinek will also keep the title of president when he becomes CEO.
“Costco has a very strong culture and a deep bench of management talent,” Sinegal said in the statement. “I have total confidence in Craig’s ability to handle his new responsibilities.”
Costco yesterday also reported fourth-quarter revenue of $27.6 billion, which met the average estimate from analysts polled by Bloomberg. Same-store sales, excluding fuel, in August rose 6 percent, the company said. That’s more than a 4.9 percent increase estimated by Retail Metrics Inc., a Swampscott, Massachusetts-based researcher.
The effect of Hurricane Irene was “slightly negative” to sales in August as the retailer closed warehouses on the east coast, the company said in a recorded call yesterday.
The retailer has struggled this year with rising costs for delivery fuel and products including coffee and cheese. The company wrote down inflation-related costs of $49 million in the third quarter. Excluding fuel, the company still boosted sales as shoppers and small businesses seek discounted groceries and televisions amid persistent joblessness.
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