Costco's Chicken Salad at Fault for E. Coli Outbreak: CDC

Zacks Equity Research
Updated

It looks like Costco Wholesale Corporation COST is in a soup. According to the Centers for Disease Control and Prevention (CDC), the company’s rotisserie chicken salad has been found responsible for an E. coli infection in seven U.S. states, namely, California, Colorado, Missouri, Montana, Utah, Virginia and Washington. Per sources, at least 19 people across these seven states fell sick after consuming the chicken salad.

The CDC disclosed that although no deaths have been reported, five people had to be admitted to the hospital. Moreover, of these five patients, two have developed hemolytic uremic syndrome (a type of kidney failure).

The CDC is trying to identify what constituent in the chicken salad may have caused the outbreak. Meanwhile, Costco has informed the CDC that it has taken its rotisserie chicken salad off the shelves effective Nov 20 and has stopped further production of the item.

Moreover, Costco is currently in talks with the U.S. Food and Drug Administration and the U.S. Department of Agriculture on the abovementioned issue, including the possible time when it would be able to restart sale of the product.

This news might come in handy for the company’s competitors. We note that Costco faces stiff competition from BJ’s Wholesale Club and Sam’s Club, a division of Wal-Mart Stores Inc. WMT. These two rivals follow similar business models as they market high volumes of merchandise at low prices in membership-only warehouse clubs.

As of now, we can only wait and watch to see whether, and if yes, how soon Costco is able to untangle itself from this E. coli outbreak issue.

Zacks Rank

Costco currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the retail sector include Ross Stores Inc. ROST and The Kroger Co. KR. Both stocks carry a Zacks Rank #2 (Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>

 


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
WAL-MART STORES (WMT): Free Stock Analysis Report
 
KROGER CO (KR): Free Stock Analysis Report
 
COSTCO WHOLE CP (COST): Free Stock Analysis Report
 
ROSS STORES (ROST): Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research