QUOTE AND NEWS
Motley Fool  3 hrs ago  Comment 
Costco's employee and membership perks are well-known, which makes the idea that it's NOT the price-club customer-loyalty leader somewhat hard to swallow. Find out which company hurdled over Costco for the top spot.
Motley Fool  Aug 9  Comment 
Membership has its advantages, especially when it comes to gas prices.
DailyFinance  Aug 8  Comment 
TUSTIN, CA -- (Marketwired) -- 08/08/14 -- Marani Brands (OTC Pink: MRIB) (PINKSHEETS: MRIB) is happy to share the growth with the Costco reorder, 15,000% stock growth, the license approval of three more states and the events that are underway as...
Motley Fool  Aug 7  Comment 
Costco remains one of the strongest retailers on the planet, despite having a very small e-commerce footprint.
TheStreet.com  Aug 7  Comment 
NEW YORK (TheStreet) -- Shares of Costco Wholesale Corp.  are down -1.19% to $118.17 as retailers posted slightly lower-than-expected sales in July as disappointing numbers from the operator of membership warehouse more than offset strength...
Wall Street Journal  Aug 7  Comment 
Retailers posted slightly lower-than-expected sales in July as disappointing numbers from Costco more than offset strength from intimate apparel and personal-care retailer L Brands and other chains.
SeekingAlpha  Aug 7  Comment 
By Tarun Bachhawat: Costco (NASDAQ: COST) has always believed in operating at low margins and transferring the benefit to its customers. Over time, Costco bearers have feared about the company's profitability and growth, but overcoming all such...
Jutia Group  Aug 7  Comment 
[at noodls] - ISSAQUAH, WA -- (Marketwired) -- 08/07/14 -- Costco Wholesale Corporation ("Costco" or the "Company") (NASDAQ: COST) today reported net sales of $8.55 billion for the month of July, ... Read more on this. Costco Wholesale...
Forbes  Aug 4  Comment 
Consistently, one of the more popular stocks people enter into their stock options watchlist at Stock Options Channel is Costco Wholesale Corp (NASD: COST). So this week we highlight one interesting put contract, and one interesting call contract,...
DailyFinance  Jul 30  Comment 
TUSTIN, CA -- (Marketwired) -- 07/30/14 -- Marani Brands (OTC Pink: MRIB) (PINKSHEETS: MRIB) expands exposure with live demos at 13 California Costco stores from 7/31 - 8/3 2014. Dry demos will be performed by sales pros. Sales pros will be...




 

Costco (NASDAQ: COST) is the largest warehouse club retailer and the second largest general retailer in the United States. Costco sells food and general merchandise, including appliances and other household goods, in bulk and at heavily discounted prices. Costco's two main competitors are Sam's Club and BJ's Wholesale Club (BJ), both of which have similar business strategies to Costco.

Costco's business strategy providing items in bulk and at low prices help the retailer maintain positive growth during slow economic times. Price conscious consumers gravitate toward discount retailers like Costco, hoping to get the most out of their money. As a result, Costco's bottom line has fared well since the economic slowdown. Costco's biggest concern is over expansion and cannibalization of existing store locations. As a result, the company has announced it will slow its domestic expansion plans. Costco will instead look to international markets for future growth.

Company Overview

Business Segments

Costco's merchandise categories include:

  • Sundries (23% of Net Sales): Sundries is Costco's largest segment by revenue and includes the sales of candy, snack foods, tobacco, alcoholic and nonalcoholic beverages, and cleaning and institutional supplies.
  • Food (21% of Net Sales): This segment is responsible for the sale of dry and institutionally packaged foods (oatmeal, rice, cereal, etc.) The food segment is Costco's second largest segment.
  • Softlines (10% of Net Sales): Softlines is Costco's smallest business segment and is responsible for the sale of apparel, domestics, jewelry, housewares, media, home furnishings, cameras, and small appliances (toasters, microwaves).
  • Fresh Food (12% of Net Sales): The fresh food segment is responsible for the sale of meat, bakery goods, deli and produce.
  • Ancillary and Other (15% of Net Sales): The ancillary and other business segment is in charge of the company's gas stations, pharmacy, food court, optical, one-hour photo, hearing aid, and travel products.

Business Growth

FY 2010 (ended August 30, 2010)[1]

  • Net sales increased 9.1% to $76.2 billion.
  • Net income increased 20% to $1.3 billion.

Trends and Forces

Mall Strategy Aids Costco's Urban Expansion

The sluggish economy and weak housing market caused many companies, especially department stores, to vacate space in shopping malls. As a result, Costco has stepped in and has been buying up these empty spaces previously occupied by department stores. Although this mall strategy is in contrast to Costco's current strategy of big box retailing in stand-alone stores, Costco stands to benefit from the switch. First, it allows Costco to expand at a quicker rate because the company won't have to worry about setting up infrastructure or have to deal with community opposition in building warehouse stores. Second, it brings Costco's stores to more generally populated areas and to high-traffic areas like malls. So instead of having to drive a long distance to a strip-mall to get Costco's low prices, consumers will now have easier access to the low prices while still being able to shop at other stores under the safe roof. Costco's bottom line stands to benefit from higher traffic and more sales.

Consumers Looking For More Than Just Bulk

Consumers prefer not to have to travel to different places in order to shop. One of the biggest reasons why giant retailers like Wal-Mart (WMT) are successful is because their stores are more than just a place for people to buy food -- these stores provide ancillary services like places to eat or get a hair cut. Many of Costco's stores already provide ancillary services like in-store food service, one-hour photo centers, optical dispensing centers, pharmacies, gas stations, hearing-aid centers, printing/copy centers and car washes. Costco uses these services to attract customers into their stores for more than just buying bulk items and improving on these services will help to increase traffic flow into Costco stores and will help generate sales.

Stands back from the keyboard in amaezemnt! Thanks!

References

  1. COST 2010 10-K, pg. 19
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki