COSTCO’s former CFO has finally stepped down. He announced his retirement almost a year ago after 40 years on the chain’s executive, but stayed on as a special consultant as his controversial successor established a foothold…
Richard Galanti in happier times: Does his retirement foretell ‘the whirlwind’ for COSTCO?
Richard Galanti – COSTCO’s longtime CFO and, since his departure from that role last spring, Executive Vice President – has left the company to what some call an uncertain future.
Galanti was hailed as a staunch traditionalist, advocating tirelessly for the preservation of COSTCO’s original, ‘warehouse-to-the-people’ identity and central goal of saving ordinary folks money.
Now, his successor as CFO, Gary Millerchip has big shoes to ill, everyone close to COSTCO agrees. And he may choose an all-new, up-styled pair for his Q2 2025 solo début – without Gallanti’s ghostly hand guiding him.
New guy, new outlook?
Many industry observers say they expect Millerchip to make some big, possibly upheaving, changes in the way COSTCO does business. He has a reputation as a corporate troubleshooter who is brought in to turn around failing corporations. Or at least update their outdated business models to better suit current and expected, future standards.
Nobody is saying COSTCO is failing, or needs a major facelift. But there have been echoes in n its space that the original ‘warehouse’ store is losing its relevance as other, competing retailers in overlapping retail sectors have begun moving ahead with forward-looking changes in the way so business, to meet the challenges o a fast-evolving economic environment.
Chief among those challengers is the supermarket sector, other members of which are struggling under seemingly incompatible demands to reduce retail food prices while maintaining increased profits for share holders.
That said…
Loblaw’s recently released it’s latest quarterly report saying retail grocery prices can be expected to continue rising through this year.
“Since Canada imports much of its fresh produce from the U.S., especially during the winter, a weaker loonie makes those products more expensive,” Loblaw’s said in its report. “While food inflation has returned to more typical levels, grocery prices are still rising faster than overall inflation — a trend we expect to continue.”
The next day, The Financial Post reported, Statistics Canada’s scheduled monthly Consumer Price Index report came out blaming a confluence of factors including a weak loonie, lingering supply chain issues and what retailers call ‘unreasonable’ requests from suppliers.
Not to mention the ‘Trump Factor’
And… All that is but preface to the potentially disastrous effects of a price war over US President Donald Trump’s threatened 25+ percent tariffs.
One might be tempted to observe that Millerchip is taking the financial reins at COSTCO at the worst possible time for both for the company and his own personal legacy.
But others say his ruthless reputation won’t succumb without a fight…
So what changes do observers expect to see?
A true icon
One ‘bellwether’ that everyone is intensely curious to follow is COSTCO’s legacy, signature $1.50 Hot Dog and Drink deal.
Its price has never wavered over the decades it’s been on the chain’s food court menu. And some consider it a sacred symbol of COSTCO’s resilience and stability.
But others say, now that Galanti – the Dog’s biggest booster – is gone, anything is fair game, to meet the company’s current and future financial goals.
Galanti is on record as having said, many times, that the day the price of the $1.50 Dog Deal goes up even a nickel, will mark the beginning of the end for COSTCO.
Extraordinary measures
COSTCO – under CFO Galanti’s direction – has taken extreme measures over the years to ensure that it’s famous loss-leader Hot Dog stays at $1.50. As of 2024, the hot dog combo would cost approxi-mately $4.40 if the price were adjusted to match inflation since 1984,” Wikipedia records.
At one point, the company even built it’s own hot dog manufacturing plant to maintain control over costs.
In 2022, Galanti stated COSTCO intends to keep the combo deal’s price constant ‘forever’. Millerchip stated in May, 2024 that the price is ‘safe’. We’ll see…
My take
Whatever else the future holds, Millerchip and COSTCO are both in for a ride like neither has imagin-ed, let alone experienced before. In the rodeo world, even the toughest cowboy finds it hard to stay on a bucking bronco the minimum 8 seconds required to avoid disqualification. I wonder what the equivalent of 8 seconds is in Millerchip’s new ‘event’?
Maggie J.