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Costco seen planning for succession with COO post
February 2, 2010 / 3:34 PM / 8 years ago

Costco seen planning for succession with COO post

* Promotes EVP Craig Jelinek to president, COO

* Retailer creates Office of the President

* Shares up 0.7 pct

By Nicole Maestri

SAN FRANCISCO, Feb 2 (Reuters) - Costco Wholesale Corp (COST.O) has appointed a president and chief operating officer, and created an Office of the President, moves analysts said signal the No. 1 U.S. warehouse club operator is planning an eventual successor to its chief executive officer.

Late on Monday, Costco said Craig Jelinek, its executive vice president in charge of merchandising, was promoted to president and chief operating officer, effective immediately.

Costco also formed an Office of the President that includes CEO Jim Sinegal, Chairman Jeff Brotman, Senior Executive Vice President Dick DiCerchio and Jelinek. The four executives will “coordinate on major company matters,” the retailer said.

Analysts said the changes show Costco is planning for the eventual retirement of Sinegal, who turned 74 on Jan. 1.

“There have been questions for years surrounding the succession plans at COST, and this announcement goes a long way in answering these questions,” wrote Janney Montgomery Scott analyst David Strasser in a research note.

He said the announcement should ease investor concerns about a management transition when Sinegal decides to step down.

Sanford C. Bernstein analyst Colin McGranahan also said the executive change signaled the retailer is planning for Sinegal’s eventual retirement.

“Given COST’s long-standing policy of promotion from within, it is nearly certain that the successor to Sinegal will come from within COST, and will very likely have a long tenure and history that embodies the company’s somewhat unique culture and operating principles,” he wrote in a note.

Costco said Jelinek had held the role of executive vice president in charge of merchandising since 2004, and before that he spent 20 years years in various management positions in warehouse operations.

Costco shares rose 0.7 percent, or 42 cents, to $58.33 in recent Nasdaq trading.

Separately, an official from the Taiwan economics ministry told a news conference that Costco plans to invest about T$30 billion ($940 million) in Taiwan for expansion, including setting up a new distribution center and more stores.

Costco’s regional marketing manager for Taiwan, Nora Wang, declined to comment on specific details but said the company had a strong desire to invest in Taiwan. [ID:nTPU002119]


Reporting by Nicole Maestri

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