by eamarquardt » Sat Apr 12, 2014 11:18 am
Costco is GREAT. No comparison to WallyWorld. Then only problem is that "Wall Street" criticizes them for treating their employees well!
Costco's Dilemma: Be Kind To Its Workers, or Wall Street?
By ANN ZIMMERMAN Staff Reporter of THE WALL STREET JOURNAL
When it comes to workers, companies can be accused of not paying enough -- or paying too much.
Wal-Mart Stores Inc.'s parsimonious approach to employee compensation has made the world's largest retailer a frequent target of labor unions and even Democratic presidential candidate John Kerry, who has accused the Bentonville, Ark., chain of failing to offer its employees affordable health-care coverage.
In contrast, rival Costco Wholesale Corp. often is held up as a retailer that does it right, paying well and offering generous benefits.
But Costco's kind-hearted philosophy toward its 100,000 cashiers, shelf-stockers and other workers is drawing criticism from Wall Street. Some analysts and investors contend that the Issaquah, Wash., warehouse-club operator actually is too good to employees, with Costco shareholders suffering as a result.
"From the perspective of investors, Costco's benefits are overly generous," says Bill Dreher, retailing analyst with Deutsche Bank Securities Inc. "Public companies need to care for shareholders first. Costco runs its business like it is a private company."
Costco appears to pay a penalty for its largesse to workers. The company's shares trade at about 20 times projected per-share earnings for 2004, compared with about 24 for Wal-Mart. Mr. Dreher says the unusually high wages and benefits contribute to investor concerns that profit margins at Costco aren't as high as they should be.
Costco, which opened its first store in 1983 and now has 432 locations, disputes the contention that it takes care of workers at the expense of investors. "The last thing I want people to believe is that I don't care about the shareholder," says Jim Sinegal, Costco's president and chief executive since 1993, who owns about 3.2 million Costco shares valued at $118 million based on yesterday's price of $36.96, up 52 cents, in 4 p.m. Nasdaq Stock Market trading. "But I happen to believe that in order to reward the shareholder in the long term, you have to please your customers and workers."
CLOCKING IN
Comparing some workplace statistics from Costco and Wal-Mart
Costco / Wal-Mart
Employees covered by company health insurance 82% 48%
Insurance-enrollment waiting periods (Full-time) 3 mos 6 mos
Insurance-enrollment waiting periods (Part-time) 6 mos 2 yrs
Portion of health-care premium paid by company 92% 66.60%
Employees who work part-time 43% 30%
Annual worker turnover rate 24% 50%
Source: the companies
Read more at faculty.washington.edu/janegf/costcovswalmart.html
OR online.wsj.com/article_email/SB108025917...3oJ2pan2IbauIm4.html
The opinions in this post are my own. My comments are directed to those that might like an alternative approach to those already espoused.There is the right way,the wrong way,the USMC way, your way, my way, and the highway.
"I'm impatient with stupidity. My people have learned to live without it." Klaatu-"The Day the Earth Stood Still"
"You can't handle the truth!"-Jack Nicholson "A Few Good Men"
"Some people spend an entire lifetime wondering if they made a difference in the world. The Marines don't have that problem"-Ronald Reagan