Costco to Close Home Stores as Spending Falls

Costco Wholesale announced plans to close two Costco Home stores Thursday as part of the discount retailer's cost-saving program to combat falling consumer spending.

The company said it would be closing down its two Costco Home Stores in located in Kirkland, Washington, and Tempe, Arizona on July 3, according to a press statement.

"The current economic slowdown and resulting weakness in the home furnishings business in particular have led us to conclude that the single-format Costco Home concept does not fit into our long-term expansion plans," Costco's CEO Jim Sinegal stated. "The closure of the two Costco Home locations will have no significant impact on the operations or financial results of the company."

In a statement, the company said it expects no layoffs as a result of the closings and that employees at the Home locations will be offered the opportunity to transfer to other local Costco warehouses.

Costco said it was not planning any further closures, with the exception for the relocation of warehouse facilities.

According to a survey by Retail Forward and PricewaterhouseCoopers on March 22, shoppers who have cut back on purchases are likely to continue their conservative shopping habits even if the economy improves.

This could be more bad news for retailers who are struggling to respond to consumers' dramatic cutback in spending.

The report, which estimates retail sales growth to be flat this year, found that three-quarters of respondents to a monthly survey of 4,000 consumers said they had shifted their shopping behaviors because of the economy, Reuters reported.

Shares of Costco Wholesale ended flat Wednesday.