Nearly 130,000 Costco employees will be eligible for a pay increase starting June 11. The Seattle Times stated that Costco employees will see a $1-to-14 or $14.50 hourly increase, while warehouse workers would receive an hourly raise of $.25 and $.50, according to CFO Richard Galanti. According to the Seattle Times, the wage increase is independent of regular wage increases. These raises come from Costco’s savings as a result of the U.S. corporate tax cuts which took effect in this year. They lowered the corporate rate and created a huge windfall for large corporations. The wholesale retailer company will be paying $110 to $120 millions before taxes for the raises. Galanti also reported a $750 million third quarter profit, an increase of $700 million from the previous quarter. The company earned $32.36 billion in sales and membership revenue for the quarter ended May 13. This is slightly more than 12% higher than last year.
Total Retail’s View: Costco has not been the only company to offer raises or bonuses due to the tax bill. Costco’s rivals have also done so. Walmart increased its hourly wage to $101 in January. Also, the target stated earlier this year that it would increase its hourly wages to $12 by the spring and to $15 by 2020. Other retailers like H ome Depot and Starbucks have also given out bonuses H to their employees. These bonuses and raises are great for employees, but also for retailers as they help to attract workers in a competitive job market. The news isn’t surprising to Costco watchers. Costco is known for its positive reputation in terms of how it treats employees. Forbes named Costco, along with Statista, America’s Best Employer in 2017. This was due to the provision of healthcare benefits for part time employees and other perks.
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Lord & Taylor will close 10 stores, including Fifth Avenue Flagship
The Hudson’s Bay Co. continues to experience declines in same-store sales across many of its divisions. is cutting costs by closing 10 Lord & Taylor shops, including its flagship store on Fifth Avenue in Manhattan. HBC announced the planned closings. It reported a net loss of 400 million Canadian Dollars, or $308million for the quarter ended May 5. This is compared to the loss of 221 million Canadian dollar, or $170million, in the previous year.
Helena Foulkes is the chief executive officer of HBC. She stated that “We are taking action to reposition Lord & Taylor in order to improve results and increase profitability.” We will use our smaller footprint to rethink our model and focus on digital opportunities. This is a great example and shows how we think about the whole business.
Total Retail’s View: The most telling sign of Lord & Taylor’s waning fortunes was HBC’s decision not to open its iconic flagship store at Manhattan’s upscale Fifth Avenue. HBC sold the iconic building to WeWork in October 2017 for $850 million. However, it planned to lease out a few floors to continue operating a store. These plans have been changed. HBC released a statement saying that the company had evaluated the best use scenarios for Fifth Avenue in New York City and decided to end its presence there following the sale of the building to WeWork. Lord & Taylor’s increased focus on digital opportunities and HBC’s commitment towards improving profitability reflect the decision to leave this iconic space.
HBC is looking at other options to return to profitability. announced earlier this week that its flash-sale unit Gilt Groupe was being sold to Rue La La parent Kynetic. The move will increase HBC’s EDITDA by $10m to $15m annually. Gilt only generated 4 percent of total HBC sales in 2017.