US wholesaler Costco to close home furnishing stores

US major Costco Wholesale Corporation today announced plans to close on 3 July its two Costco Home stores, located in Kirkland, Washington, and Tempe, Arizona. Costco, one of the nation's largest wholesale club chains, has made some gains during the economic downturn as shoppers have headed to its stores mostly for deals on bulk food items and fuel. But sales of non-food items, such as furniture, have dropped as consumers continue to curb their discretionary spending.

Costco said it was a "valuable experiment" but the current slowdown in the home-furnishing business led it to conclude the concept does not fit into its long-term plans. "The current economic slowdown and resulting weakness in the home furnishings business in particular have led us to conclude that the single-format Costco Home concept does not fit into our long-term expansion plans," CEO Jim Sinegal said in a statement.

The company does not anticipate layoffs related to the closings and still plans to offer home furnishings at its remaining wholesale clubs. Employees at the Costco Home locations will be offered the opportunity to transfer to other local Costco warehouses. The closings are also not expected to hurt Costco's financial results.

Costco currently operates 554 warehouses, including 407 in the United States and Puerto Rico, 76 in Canada, 21 in the United Kingdom, six in Korea, five in Taiwan, eight in Japan and 31 in Mexico. The company also operates Costco Online, an electronic commerce web site, at www.costco.com and at www.costco.ca in Canada.

Costco Wholesale Corporation is the largest membership warehouse club chain in the world based on sales volume. It is the fifth largest general retailer in the US. Wal-Mart's warehouse club chain Sam's Club, ranks second in sales volume among warehouse clubs behind Costco Wholesale, despite the fact that Sam's has more retail locations.

A warehouse club is a retail store, usually selling a wide variety of merchandise, in which customers pay annual membership fees in order to shop. The clubs are able to keep prices low due to the no-frills format of the stores. In addition, customers are required to buy large, wholesale quantities of the store's products, which make these clubs attractive to both bargain hunters and small business owners.