Here we go again. Consumers can once again expect bare shelves in the toilet paper section next time they make a trip to Costco Wholesale (NASDAQ: COST), as the Covid-19 delta wave sparks a major run on “key” inventory.
Costco is expected to reintroduce buying limits on pandemic-related key items such as bottled water and toilet paper, as the rapidly spreading Covid-19 delta variant causes an uptick in demand, and supply bottlenecks continue to worsen. “The factors pressuring supply chains and inflation include port delays, container shortages, Covid disruptions, shortages on various components, raw materials and ingredients, labor cost pressures and trucker and driver shortages,” explained Costco CFO Richard Galanti during an earnings call on Thursday.
As a result, Galanti said Costco will once again begin imposing limitations on pandemic-popular items such as “bath tissues, roll towels, [and] Kirkland Signature water.” He stopped short of revealing when exactly, the limitations— which were previously introduced during the beginning of the pandemic— would be brought into effect.
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“A year ago there was a shortage of merchandise, now they’ve got plenty of merchandise, but there’s two to three-week delays on getting it delivered because there’s a limit on short-term changes to trucking and delivery needs of the supplier,” Galanti said, adding that the ongoing global semiconductor shortage is expect to significantly impact a number of consumer goods well into 2022, particularly tablets, video games, and major appliances.
The latest round of impending buying limits come after numerous companies introduced similar rules last year, as store shelves were left bare of household essentials— namely toilet paper. Although retailers have rebounded since the buying cascade, Brazilian-based Suzano Sa— one of the largest wood pulp producers in the world, warned back in March that a global toilet paper shortage is around the corner, as a significant shortage of shipping containers creates a worsening supply bottleneck.
Information for this briefing was found via Costco and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
