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Wed October 9, 2013
Costco Aims for World Domination (or at Least 36 More Stores)
You can already buy gigantic packages of toilet paper and toothpaste at Costco stores everywhere from Misato City, Japan, to Lidcombe, Australia. Those are just two of Costco's 634 stores worldwide.
But now, Costco is planning a more aggressive expansion in the coming 12 months. The wholesale retailer says it aims to open as many as 36 more stores, 10 more than in the fiscal year that ended at the beginning of September. Half of those stores will be outside the U.S.
People have to pay annual membership fees to shop at Costco stores, and Morningstar analyst Ken Perkins says Costco has successfully translated that model overseas.
"I think they've done well," Perkins said. "They're doing it at a calculated pace, but it seems like it's resonating internationally and we see a lot of opportunity to keep adding new stores in international markets."
New member signups jumped 9 percent in the most recent quarter, fueled by three store openings in Japan. Later this year, Costco plans to open two stores in Canada, two in Australia, and one in Mexico.
Issaquah-based Costco said sales in the fiscal quarter ended Sept. 1 rose one percent to $31.8 billion, and profit rose 1.3 percent. Comparable-store sales climbed 5 percent, boosted by sales of things like frozen food, candy, wine, liquor, and clothing.
Perkins says membership fees, which total $55 a year for a regular Goldstar membership, are key to Costco's success.
"They can sell their goods basically at a wholesale cost because their membership fees allow them to generate most of their profits from those fees and they can give away food at a much lower price," he said.