Jim Cramer says Costco tells suppliers that raise prices it will make a Kirkland version at half the cost, citing Tito’s vodka.
Costco’s CFO Gary Millerchip says Kirkland saves members at least 15% to 20% versus national brands with equal or better quality.
Sam’s Club grew comparable sales 4.4% excluding fuel, trailing Costco’s 6.7%, while Target cut prices on over 10,000 items.
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CNBC’s Jim Cramer used his Mad Dash segment on November 11 to explain how Costco Wholesale (NASDAQ:COST) handles a supplier that raises prices. Cramer said Costco tells such suppliers it will make a Kirkland-brand version at half their price, using Tito’s vodka as the example. That take is Cramer’s alone. Costco has not publicly commented on any specific supplier, and the clip cuts off mid-sentence with Cramer saying “Tito’s said, hey, you know, we’re not going to do”.
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Cramer described the strategy in broader terms:
“[Costco is] very hard on a lot of the suppliers to try to get inflation down.”
He called it “about keeping America from having too high inflation” and added that “only Walmart has really held the line.”
Kirkland Signature Gives Costco Leverage Over National Brands
Costco management describes the same leverage in its own words. On the fiscal fourth-quarter call, CEO Ron Vachris said:
“We continue to see the Kirkland Signature brand broaden. We continue to introduce strong Kirkland items that are effective tools for us to fight back on pricing.”
CFO Gary Millerchip said Kirkland offers “savings of at least 15% to 20% compared to the national brand equivalent with equal or better quality.” Costco also kept lowering prices on its own label. Kirkland walnuts fell from $13.79 to $9.99, and every quarterly release in fiscal 2026 cited price cuts on Kirkland items.
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Supplier Squeeze and Record Payout Arrive Within 24 Hours
Cramer’s comments came the morning after Costco declared a $30 per share special dividend, its largest ever and double its last one of $15. That earlier special dividend was declared on December 14, 2023. Posts on X estimated the new payout will cost Costco $13.3 billion, alongside a new $4 billion buyback program. Cramer said the payout “shows you the fealty they have with shareholders.”
Both stories come from the same operating model. Fiscal 2026 revenue reached $303.154 billion, up 10.14%, and free cash flow rose to $9.390 billion. Member loyalty held firm, with 150.4 million cardholders and a worldwide renewal rate of 89.8%. Low Kirkland prices keep members renewing, and renewals produce the fee income and cash flow that pay for shareholder returns. The estimated cost of the special dividend is larger than a full year of free cash flow, so the payout also draws on the balance sheet.
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The stock reflects that confidence. Shares traded at $1,075.53, up 5.52% in a week and 13.75% in a month. The evening before, Cramer’s lightning round recommended buying Costco. He called the stock undervalued and said doubters should be ashamed.
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How Sam’s Club and Target Compare
Walmart (NASDAQ:WMT) runs the closest rival format. In Walmart’s fiscal second quarter, Sam’s Club U.S. comparable sales rose 4.4% excluding fuel and transactions grew 7.0%. Its Member’s Mark brand competes directly with Kirkland. Costco’s adjusted comparable sales grew 6.7% in its fiscal fourth quarter, which keeps it ahead of Sam’s Club on that measure.
Target (NYSE:TGT) is pursuing value through owned brands and price cuts. CEO Michael Fiddelke said:
“Over the past year, we’ve reduced prices on more than 10,000 frequently purchased items as part of our commitment to delivering outstanding value every day.”
Target’s comparable sales grew 3.8% last quarter, but it has no membership fee base comparable to Costco’s.
What Investors Should Track Next
Costco’s filing with the record and payment dates for the special dividend is the next document to read. Costco plans about 28 net new warehouses in fiscal 2027. Investors should also watch whether Kirkland launches and price cuts keep traffic growing near the 3.3% rate from last quarter.
Data Sources
Cramer Mad Dash on Costco: Cramer’s Tito’s and Kirkland comments, his inflation take, and his remarks on the dividend.
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