Friday, October 13, 2006

Costco Liquidity Worsens

Costco (COST) working capital has decreased by $1,000,000,000 over the past year. (Read supplemental information issued by the company) Management danced around the question by pointing to stock repurchases and a large chunk of long-term debt, which is now short term. The drop is from $1.477 billion last year to $407 million right now. This will seriously constrain management’s hands for future stock repurchases and expansion; unless they issue more capital somehow somewhere and at what cost?