http://www.boston.com/business/articles/2007/02/26/costco_to_change_return_policy/
Costco to change return policy
February 26, 2007
DALLAS --In a break with its policy of allowing customers to return goods at any time for a full refund, Costco Wholesale Corp. is setting a firm return period of 90 days for consumer electronics.
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 cell phones 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.
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. In August, Costco cited the returns along with price reductions on furniture in reining in its fourth-quarter earnings outlook to 71 cents to 74 cents a share, a reduction of four cents to five cents from the previously forecast range. Ultimately, Costco reported 75 cents a share f