Costco Pulling Plug on Costco Home

Membership warehouse club operator Costco Wholesale Corp. will permanently shut down its two Costco Home stores. The two test sites — located in Kirkland, Wash., and Tempe, Ariz. — are scheduled to be closed on July 3.

Costco opened the Kirkland unit in December 2002, was touting the potential of the second unit in 2005, and as recently as 2006 had mulled opening a third. Costco is not planning any further closures, except for the relocation of its warehouse facilities, the company said.

"Costco Home has been a valuable experiment for us," said Jim Sinegal, ceo. "We provided a competitive home furnishings alternative to our members in two locations and learned a great deal about home furnishings in the process."

But because of the economy's downturn and its negative effects on the home furnishings industry "in particular," he continued, "have led us to conclude that the single-format Costco Home concept does not fit into our long-term expansion plans."

As the current lease obligations for these sites near their end, "it made sense," Sinegal added, "for us to make this difficult decision now."

Home furnishings products will continue to be sold at the warehouse club chain's other 407 U.S. locations.

Aside from its warehouse clubs nationwide, Costco also operates 76 stores in Canada, 21 in the United Kingdom, six in Korea, five in Taiwan, eight in Japan and 31 in Mexico. The company also operates two ecommerce web sites — in the United States and in Canada.

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