Jim Sinegal to retire as Costco CEO
September 6, 2011
By Warren Kagarise
Issaquah-based warehouse club selects longtime manager as successor
Costco members, breathe a sigh of relief.
Incoming CEO Craig Jelinek does not intend to change anything about the $1.50 hot-dog-and-soda combo.
“That price will never increase — I can’t say never, because you never know — but I’ve got to tell you, I don’t want to be the one that does it,” Craig Jelinek joked Sept. 1, a day after Costco CEO and cofounder Jim Sinegal announced plans to retire.
Sinegal, a legendary fan of the company’s hot dog deal, plans to step down as CEO on Jan. 1 after transforming Issaquah-based Costco from a lone South Seattle warehouse almost 30 years ago to 592 outposts around the globe nowadays. The frugal Sinegal built the empire by offering generous benefits to employees and deep discounts to customers.
Jelinek, president and chief operating officer at the No. 3 retailer in the United States and the largest employer in Issaquah, started at Costco as a warehouse manager in 1984.
“Costco has a very strong culture and a deep bench of management talent,” Sinegal said in a statement. “I have total confidence in Craig’s ability to handle his new responsibilities and feel we are fortunate as a company to have an executive of his caliber to succeed me as chief executive of Costco.”
Though Sinegal, 75, is stepping down as CEO, he intends to remain at Costco through January 2013 to advise and assist Jelinek, 59, through the transition. The outgoing CEO also plans to remain on the Costco board.
Both executives learned about retail from warehouse club pioneer Sol Price, the late FedMart and Price Club founder. (Price Club and Costco merged in 1993.)
Costco board members selected Jelinek as president and chief operating officer in February 2010 — a sign the company intended for the longtime employee to succeed Sinegal.
“We’ll run the business the same,” Jelinek said. “We’ve been very fortunate with the way our business has grown over the last 25-plus years. We won’t change a lot of things. You’ll have to adjust to the marketplace, but we’ll take care of our customers, take care of our employees, and take care of our supplies and our shareholders. If we continue to do that, good things will continue to happen.”
Jelinek served in numerous roles in the company since signing on as a warehouse manager.
“I’ve also, in growing up through the retail, I’ve done all of the jobs,” he said. “I have an understanding of the business because I’ve been there. I think it helps a lot to be able to manage based on what you’ve done.”
Sinegal and company Chairman Jeffrey Brotman, a Costco cofounder, advised Jelinek in the months since he started as president.
“Jim has great vision, and one thing that he continues to stress is just stay focused on your plan,” Jelinek said.
Sinegal also advised Jelinek to prepare for changes in the marketplace — but not to change long-term strategy based on short-term problems.
“You have to adjust to them, but don’t start changing your overall business for a bump in the road,” he said.
Costco employs about 2,700 people in corporate offices and at the flagship warehouse in Pickering Place. The company headquarters relocated from Kirkland to Issaquah in 1996.
“Most good CEOs serve their people; their people don’t serve them,” Jelinek said. “That’s what it’s all about. If you work with your people and give opportunities for your people to grow and help them succeed in what they want to accomplish, only good things happen for you.”
Jeff Elliott, Costco assistant vice president of financial planning and investor relations, said Wall Street analysts and investors expected the transition from Sinegal to Jelinek. The company sometimes received criticism from investors for failing to define a succession plan.
“When it comes to the business model and driving down pricing and offering the very best value on goods, and services to our members day in and day out, having a true love of the employee base — every employee counts, every employee makes a difference — and being willing to pay a livable wage with benefits, they’re very similar in all of those things,” Elliott said.
Sinegal earned a reputation among employees for popping into warehouses around the globe. Jelinek intends to continue the practice.
“They speak the same. They have the same talk. They have the same rapport with employees,” Elliott said. “They’re very much alike in that way.”
Warren Kagarise: 392-6434, ext. 234, or firstname.lastname@example.org. Comment at www.issaquahpress.com.