The Difference Between Televisions and Pianos

Costco sells televisions. Here’s what its CFO had to say on the subject of recent sales, as reported by Jeff Matthews:

Our television sales have been way up in November…. [W]e had unit sales up over 50% in the four weeks, but that translated into a dollar sales increase of only 3%.

Steinway, on the other hand, sells pianos:

For the first nine months of 2008, Steinway said piano revenues increased 5%. Steinway grand unit shipments declined 6% and mid-priced piano unit shipments decreased 2%.

Clearly Steinway has much more pricing power than Costco. But which of these two companies is better positioned for recession? Costco stock is down 24% year-to-date; Steinway, which trades under the rather-too-cutesy ticker symbol LVB, is down 39%.

Makes sense to me. People spend money at Steinway; they save it at Costco. Which makes Costco’s prospects rather healthier than Steinway’s.

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