Why Price Clubs Are Feeling the Pinch

Sales are up as bargain-hunters flock in. But costs are soaring, and Sam's Club, Costco, and the like are fearful of passing them on

In the current retail environment, some chains have become so afraid of scaring off shoppers that many of them are taking it on the chin when it comes to paying for higher costs of food, fuel, and household goods such as paper towels. "The worry is that if they increase prices too much across the board outside of food, the drop in sales will be too great," says David Abella, a portfolio manager who owns several retail stocks, including Wal-Mart, at New York's Rochdale Investment Management. The fund manages $2.5 billion in assets.

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