Costco cuts time to make returns

**zippyjuan** · 02-27-2007, 11:39 AM

This is probably a "Got Deals" thread, but I thought more people might read it here.
http://seattletimes.nwsource.com/htm..._costco27.html

Costco cuts time to make returns
By Dow Jones / The Associated Press

DALLAS — In a break with its policy of allowing customers to return goods at any time for a full refund, Costco Wholesale is setting a firm return period of 90 days for consumer electronics.

The previous policy had hurt the Issaquah-based retailer's profit.

Costco on Monday introduced the revamped policy in its 109 California warehouses, and it plans to debut the changes in the rest of its 371 U.S. locations within the next five weeks, Chief Financial Officer Richard Galanti confirmed.

In general, Costco allows its customers an unlimited grace period to return purchases for a full refund. The only exception was a six-month deadline after the date of purchase for returning desktop computers. That unlimited timeframe still applies to Costco merchandise other than consumer electronics. Electronics goods purchased before the new 90-day policy goes into effect can be returned at any time.

Televisions, computers, cameras, camcorders, iPods, MP3 players and cellphones will fall under the new policy. Those products represented about 5 percent — or roughly $3 billion — of Costco's $59 billion in sales from its fiscal year ended Sept. 3.

In turn, Costco will extend the manufacturer's warranties on TVs and computers to two years from one.

"Our view is, even with these changes, we still have the best return policy in the retail industry," Galanti said, adding that Costco does not impose a restocking charge on returned items.

Returns of consumer electronics — flat-panel televisions, in particular — put a squeeze on Costco's profit margins in its latest fiscal year. Costco has posted strong sales of the TVs, including a 50 percent rise in November at stores open for at least a year, but it has seen many come back to its stores as customers encountered difficulty installing them at home.

The policy of allowing a full refund of the purchase price also allowed for some opportunism, as prices on flat-panel TVs have fallen precipitously in the past year.

"Some of our customers have been essentially trading up," said Jeff Elliott, Costco's finance director.

JP Morgan Securities analyst Charles Grom estimates that returns of consumer electronics pared 8 cents a share from Costco's earnings last year, when Costco reported earnings of $2.30 a share.

Shares of Costco slipped 7 cents to $57.40 Monday.

Information supplied by Costco's Elliott was reported by Bloomberg News.

**johnnymk** · 02-27-2007, 01:02 PM

It's about time.

**brainsmile** · 02-27-2007, 01:17 PM

nooooooooooooo......

**Airencracken** · 02-27-2007, 01:18 PM

Well, there goes the Costco upgrade. :/

**guiseppewv** · 02-27-2007, 01:37 PM

I wish they would speed up the time it takes to wait in line to return things. Last week I waited for 30-45 minutes to return 1 item.

**MikeD** · 02-27-2007, 02:02 PM

Originally Posted by guiseppewv

I wish they would speed up the time it takes to wait in line to return things. Last week I waited for 30-45 minutes to return 1 item.

In our Costco the customer service desk is RIGHT INSIDE the front door. You're hit with a double whammy when you walk in; the morons who walk in and immediately stop to put their card back in their purse/wallet (and block everyone else from coming in), as well as the people trying to return stuff.

Not sure if other Costco's are set up the same way, but it's a serious PITA in ours...

**kimchicowboy** · 02-27-2007, 03:11 PM

no mention of people who purchased goods prior to this policy change.

**MrGreg** · 02-27-2007, 03:13 PM

Originally Posted by kimchicowboy

no mention of people who purchased goods prior to this policy change.

Electronics goods purchased before the new 90-day policy goes into effect can be returned at any time.

Kinda makes me want to go buy a new tv before the change takes effect here.

**molecularfire** · 02-27-2007, 05:55 PM

Originally Posted by guiseppewv

I wish they would speed up the time it takes to wait in line to return things. Last week I waited for 30-45 minutes to return 1 item.

Well, this new policy probably would make that line shorter.

**ufcrusher** · 02-27-2007, 09:48 PM

Frankly, its a bunch of crap. I dont personally subscribe to the "costco upgrade" ideology, but the lifetime return policy was useful when stuff broke.

**VTGreg** · 02-28-2007, 06:47 AM

Is it possible that Costco is having a bad quarter and wanted to get a sales boost? I'm sure there will be a run on expensive items as individuals try to get their merchandise before the return policy changes.

**Thesifer** · 02-28-2007, 07:16 AM

Originally Posted by MikeD

In our Costco the customer service desk is RIGHT INSIDE the front door. You're hit with a double whammy when you walk in; the morons who walk in and immediately stop to put their card back in their purse/wallet (and block everyone else from coming in), as well as the people trying to return stuff.

Not sure if other Costco's are set up the same way, but it's a serious PITA in ours...

In the one that I normally go to in Mission Valley CA, They have the same "Entrance" but there are two ways you go, one for returns and signing up for an Account, and the other for entry.

**clutchy** · 02-28-2007, 04:09 PM

It has to do with new accounting changes and revenue recognition.

How do you recognize revenue if it can potentially be returned at any time? is it even sold if it can be returned whenever?

these are the problems, and also "some" people screwing them for their own personal gain...

they were also having acct. problems with the recognition of revenue from membership sales. they used to recognize everything when people bought a card, now they have to space out it out over twelve months to "match" the revenue to the benefit provided...

it's very exciting!!

**molecularfire** · 02-28-2007, 04:23 PM

Originally Posted by ufcrusher

Frankly, its a bunch of crap. I dont personally subscribe to the "costco upgrade" ideology, but the lifetime return policy was useful when stuff broke.

Yeah, you may not have taken advantage of that but I know plenty of people who have. Heck, I used to before I decided that it was too easy and felt bad for the company.

**MrGreg** · 02-28-2007, 04:37 PM

I wouldn't use their return policy just to upgrade to a newer model, but I liked knowing it was there just in case my $2k+ tv legitimately dies after 2 years. I know they are extending the manf. warranty now, but getting warranty service is much more hassle than just returning the thing if it dies.

**VTGreg** · 03-01-2007, 05:45 AM

Originally Posted by clutchy

It has to do with new accounting changes and revenue recognition.

How do you recognize revenue if it can potentially be returned at any time? is it even sold if it can be returned whenever?

these are the problems, and also "some" people screwing them for their own personal gain...

they were also having acct. problems with the recognition of revenue from membership sales. they used to recognize everything when people bought a card, now they have to space out it out over twelve months to "match" the revenue to the benefit provided...

it's very exciting!!

There are plenty of companies that have return policies that allowed returns at any point. Granted most of them do not sell high priced electronics or consumer packaged goods, but they somehow get by.

I understand that it may reporting results and giving guidance less exact, but you also have to consider that people are going to take their business somewhere else due to the policy change. Costco is great for the expensive items if you know your stuff and do your homework ahead of time, but their prices aren't that much lower to make up for the lack of customer service at time of purchase.

It will be very interesting to see how this impacts their sales in the long run.