EXCLUSIVE: Costco's Outgoing CFO Gets Candid About 40-Year Tenure

Progressive Grocer talks with exec who became the voice of the company and the man behind the numbers

3/11/2024

Richard Galanti just marked his 40th year at Coscto, and will stay on during a transition period through January 2025.

Richard Galanti started at Costco Wholesale Corp. 40 years ago, about six months after co-founders Jim Sinegal and Jeff Brotman opened the first warehouse in Seattle. On March 15, Galanti will step down from his longtime role as CFO, handing the reins to former Kroger Co. SVP and CFO Gary Millerchip but staying on through January 2025 to assist in the transition. Galanti will remain on the Costco board of directors until his January retirement. He recently spoke with Progressive Grocer about his impactful career at Costco, including serving as the company’s literal voice on earnings calls, and about some of his favorite things about the organization, its people and its products.

Progressive Grocer: If you had told young Richard, 40 years ago, on his first week on the job where he’d end up now, what do you think he’d say?

Richard Galanti: It’s funny – people ask me if I ever thought Costco would be this successful. At the time, I remember thinking I’d be here two, three or four years and maybe head back to my hometown of Atlanta. I knew the two founders, because I worked with them on Series A financing.

People will also say, “That was a big risk to take.” But it wasn’t, really. I was 27 then, single, didn’t own a car, didn’t own a house. What was the worst that could happen? I could always go back to my old employer on Wall Street. I saw this as an opportunity.

PG: You are essentially the voice of Costco, on hundreds of earnings calls over the years. How do you feel about that, and will you be listening in on future calls after your tenure ends?

RG: It’s been a privilege, and I’m honored to do it. Usually, as public companies get larger, the CEO is the voice, but our senior operators and CEOs were on the road a lot, so it was fortuitous for me. I’ve enjoyed doing it and, over time, hopefully, I shared the transparency and straightforwardness that we all present at Costco.

PG: Do you have a rapport with certain analysts that dial in and ask questions over the years?

RG: Oh, sure. I’ll occasionally get an email from a former equity analyst from places like E.F. Hutton and Merrill Lynch and it’s fun to hear from them. Certainly, there are some portfolio managers and institutional investors who have been around a long time. There is one retail analyst who was at Fidelity when we went public in 1985 and I think he now runs their biggest fund – we don’t talk as often as we used to, but it’s fun to connect in cases like that.

PG: And there will be a new voice, with Gary (Millerchip) as CFO.

RG: Everyone has their own style. I’m sure he will have a different style than me. But if you think about it, Jim Sinegal was the co-founder and spirit of the company who brought us to where we are today and people used to say, “When he retires, how would you ever take his place?” He’d be the first to say, “There are people who can.” That was proven with Craig (Jelinek) and proven again over the last two years with Ron (Vachris) as president and now CEO. Gary is a seasoned professional and it will be seamless.

PG: Speaking of leadership, I’m sure you’ve been a mentor to many over the years. What are you most proud of in terms of that part of your experience at Costco?

RG: Internally, the culture at Costco, aside from doing the right thing and taking care of customers and employees and the other standard things we have on our original mission statement, is to say that it’s okay to have fun, it’s okay to smile. We don’t manage by intimidation.

When I speak to students, I will say, “Get there a half hour early and see how employees greet their guests. If you get a chance to visit the lunchroom, you also get a sense of the environment at a company.”

A colleague of mine, who was our in-house general counsel, was interviewing an attorney I know. He didn’t get the job but thanked me afterwards and told me that when he was talking to our general counsel about the work environment, the general counsel leaned back in his chair and said, “I like to think of it as a general jerk-free workplace.”

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Also, in terms of mentoring, I have had the opportunity, not just in my area but throughout the company with its open-door policy, to talk to people. When the announcement was made (about the retirement), I got a few hundred texts and emails. Some were from employees who are now mid-level or upper management who said, “I remember when I came to you and talked about this.” That was partly me, but partly our company culture and it permeates throughout our organization.

We have one of the lowest, if not the lowest, turnovers in the industry. Like many retailers, 90% of our employees are hourly and our annual turnover rate is 13% to 14%. Those are off-the-chart low numbers, and it’s partly because we pay well but also because of the culture.

PG: That carries across levels, doesn’t it?

RG: We have 13 four-week periods in our fiscal year; and every four weeks we have a day-and-a-half budget and business review meeting where we update the numbers and, more importantly, review what’s going on with our business. Managers from all over the world come in. About 150 of us are in the same room. What is great about this process is how the Costco management team works together in a very collaborative fashion to run and continuously improve our business. There are things to do with Meet, Teams and Zoom, but at the end of the day, being in person on a regular basis is one of our great strengths.

PG: So, Richard, what’s in your own cart when you’re shopping at a Costco club?

RG: Well, when my wife is out of town and I’m feeding myself at home, I will buy a rotisserie chicken, shrimp cocktail and the Kirkland Signature vanilla ice cream, which is the best. I’d also get some King Crab legs if they are available, and some grapes. I may buy reading glasses, because I’m always losing them, but it’s okay because they are only $14 or $15 for a three pack.

PG: What’s for lunch?

RG: The two quintessential items we’re known for are the $1.50 hot dog and the $4.99 rotisserie chicken. They are likely to stay the same for a while.

Once, Jim said, “If you ever change the price of a hot dog and soda, I’ll effing kill you.” We’ve seen tee shirts with that quote from Jim, but we have done some things to keep the price down, including building our own hot dog plant. We also built our own poultry processing facility, in addition to working with other suppliers.

PG: After January 2025, what’s next for you?

RG: One of my kids was in the office a few weeks back. He came up to my cubicle and we went to go down to the commissary to have a bite to eat and someone asked, “Are you excited about your dad’s retirement?’ And he said, “Frankly, we are a little concerned – ‘What he is going to do?’”

I look around and there are people in their 60s and 70s still working. Our board member Charlie Munger was just five weeks shy of 100 when he passed. Not that I want to work until I’m 90, but you have to stay busy. They say not to retire on Friday and have your plate full on Monday, so I think I will be on a couple of boards or things like that, and I hope to still teach some classes.