Ron Vachris to take Costco CEO reins from Craig Jelinek

The quiet promotion of Costco Wholesale Chief Operating Officer Ron Vachris to president over a year-and-a-half ago signaled what many industry observers expected it to be.

After Wednesday’s market close, Costco announced that Vachris will become the new CEO on Jan. 1, succeeding longtime chief executive Craig Jelinek. The Issaquah, Washington-based warehouse club chain said Jelinek confirmed his intention to step down from the CEO post on that date, and the board of directors elected the 57-year-old Vachris as president and CEO.

Costco had reported the appointment of Vachris as president and COO in early February 2022 via an 8-K filing with the Securities and Exchange Commission. Previously holding the title of executive vice president and COO for merchandising, he picked up the president’s title from Jelinek. In moving up to president, Vachris also joined Costco’s board.

At the time, published reports and industry analysts speculated that Vachris’ elevation to president could signal an upcoming CEO succession.

Costco stated Wednesday that Vachris and Jelinek have “worked hand in hand over the last 21 months” in Vachris’ role as president and that his promotion to CEO marks “the culmination of the long-standing succession plan that Craig has discussed with the board.”

Related:Ron Vachris Named President and COO of Costco

From left: Ron Vachris, current president and COO and incoming CEO at Costco, and Craig Jelinek, current CEO of Costco. / Photos courtesy of Costco

Plans call for Jelinek to stay at Costco in an advisory role until April 2024 to assist Vachris during the leadership transition, the company reported, adding that Jelinek also will continue to serve on the board of stand for re-election at the annual shareholders meeting in January 2024.

“Costco has a very strong culture and a deep bench of management talent,” Jelinek said in a statement. “I have total confidence in Ron and feel that we are fortunate as a company to have an executive of his caliber to succeed me.”

Vachris brings to the CEO role more than 40 years of service at Costco, where he began as a forklift driver and later ended up serving in every major role related to the wholesale club retailer’s business operations and merchandising, the company noted.

Before being named president and COO, Vachris had served executive VP and COO for merchandising since mid-2016. Prior to that, he was senior VP of real estate from August 2015 to June 2016 and senior VP and general manager of the Northwest region from January 2010 to July 2015. He became a part of the Costco organization through its integration with The Price Club in the wake of the companies’ 1993 merger. He began his retail career in 1982 with The Price Company.

Related:Costco sued for unlawfully sharing pharmacy patient health care data

Jelinek has been CEO of Costco since the start of 2012, when he succeeded co-founder Jim Sinegal. Costco had appointed Jelinek as president and COO in February 2010, with Sinegal relinquishing the president’s title but continuing as CEO—the same way that Vachris ended up succeeding Jelinek as chief executive.

William Blair & Co. analyst Phillip Blee noted that Jelinek, who joined Costco in 1984 as a warehouse manager, was only the company’s second CEO after taking the helm from founder Sinegal.

“Vachris has a 40-plus-year tenure with the company after starting as a forklift driver before taking a similar path as his predecessor through various roles in merchandising and warehouse operations,” Blee wrote in a research note on Thursday. “The appointment of Vachris to CEO was broadly expected after Costco transitioned the president title from Jelinek to Vachris in early 2022, which was reminiscent of Jelinek’s designation as heir apparent in 2010. We believe the long tenure of Vachris and the broader executive management team, coupled with the company’s lean, consistent operating model, should ease investor concerns about a potentially bumpy transition on the retirement of Jelinek.”

Related:Costco returns e-commerce sales to growth in September

For its 2023 fiscal year ended Sept. 3, Costco added over $15 billion to its top line in generating total revenue of $242.29 billion, up nearly 6.8% year over year. The warehouse club giant is the nation’s third-largest grocery retailer, with estimated grocery sales of about $91 billion, behind only Walmart at roughly $314 billion and The Kroger Co. at approximately $109 billion.

Currently, Costco operates 861 wholesale clubs, compared with 839 a year earlier. By market, the company has 591 clubs in the U.S. and Puerto Rico, 107 in Canada, 40 in Mexico, 33 in Japan, 29 in the United Kingdom, 18 in Korea, 15 in Australia, 14 in Taiwan, five in China, four in Spain, two in France, and one each in Iceland, New Zealand and Sweden. Costco also runs e-commerce sites in the U.S., Canada, the U.K., Mexico, Korea, Taiwan, Japan and Australia.

*Editor's Note: Article updated with analyst comment.