Costco to close home stores in Kirkland, Arizona

Costco Wholesale said today it will close its two home stores in Kirkland and Tempe, Ariz., on July 3.

The stores, which sell furniture and other home furnishings, opened in 2002 and 2004, respectively.

"Costco Home has been a valuable experiment for us," CEO Jim Sinegal said in a press release.

Because of the economic slowdown and weakness in the home furnishings business, Costco has decided the home stores do not fit with its long-term plans, Sinegal said.

Costco is not planning to close other stores and will continue to sell home furnishings at those locations.

The company expects no layoffs from the closings.

About 90 people work at each location, half of them part time. They will be offered jobs at their local Costco warehouses, and the 22 people who work for the home stores from Costco's Issaquah headquarters will be offered other jobs at the company.

Last month, Costco reported a 27 percent drop in second-quarter profit, to $239.7 million.

Over the past few months, the chain has seen higher rates of shopper frequency, although people are not spending as much as they used to, Chief Financial Officer Richard Galanti said in a telephone interview.

"They're buying fewer bigger ticket items and more food and sundries and necessities," he said. Demand for Costco's oversize pizzas ($9.99) and rotisserie chickens ($4.99) has been particularly strong.

Costco operates 554 warehouses in the U.S. and abroad.

Melissa Allison: 206-464-3312 and mallison@seattletimes.com