Costco CFO says customers switching from beef and steak to cheaper meats may indicate looming recession

Costco CFO Richard Galanti said late last month that some customers are switching from buying more expensive meats like steak and beef at the store to cheaper ones like chicken and pork, and even canned products.  

Galanti said going back 20 years the company “would see some sales penetration shift from beef to poultry and pork” during a recession. 

“We have seen some of that now,” he said during the company’s third quarter earnings call on May 25. “I think anecdotally, I heard a few months ago from our Head of Food and Sundries buyer, that we saw some switch even to some canned products, like canned chicken and canned tuna and things like that.”

He added that purchases of Costco’s less expensive brand Kirkland Signature for various products was up compared to name brands. 

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“That would, again, at least anecdotally, suggest that we’ve seen people looking for better bargains,” he said, adding, “We try to correct people when they said was it a downgrading because, arguably, it was an upgrade when they went to Kirkland Signature.”

Galanti said that daily transactions were down 3.5% in the U.S. mainly because customers were buying fewer “bigger-ticket nonfood discretionary items” like furniture and televisions.

He partially attributed that to two years of “outsized growth” in those purchases “as people were buying things from their home.” 

He added, “We saw outsized sales in indoor and outdoor furniture and electronics and TVs and exercise equipment. And so, we’re not only comparing against this ‘recession’ or concerns about big-ticket items but comparing against uber strength over the last two years prior to that. So I think we’ll come out of this fine.”