About Costco Wholesale Corp

Costco Wholesale Corporation, together with its subsidiaries, engages in the operation of membership warehouses in the United States (U.S.) and Puerto Rico, Canada, Mexico, Japan, the United Kingdom (U.K.), Korea, Taiwan, Australia, Spain, France, China, and Iceland. The company operates warehouses worldwide. The company operates e-commerce websites in the U.S., Canada, Mexico, U.K., Korea, Taiwan, Japan, and Australia.

The company operates membership warehouses and e-commerce websites based on the concept that offering its members low prices on a limited selection of nationally-branded and private-label products in a wide range of categories will produce high sales volumes and rapid inventory turnover.

The company buys most of its merchandise directly from manufacturers and route it to cross-docking consolidation points (depots) or directly to its warehouses. The company’s depots receive large shipments from manufacturers and quickly ship these goods to warehouses.

The company’s strategy is to provide its members with a broad range of high-quality merchandise. The company seeks to limit most items to fast-selling models, sizes, and colors. The company carries less than 4,000 active stock keeping units (SKUs) per warehouse in its core warehouse business, significantly less than other broadline retailers. The company averages anywhere from 10,000 to 11,000 SKUs online, some of which are also available in its warehouses.

The company offers merchandise and services in the following categories:

Core Merchandise Categories (or core business):

Foods and Sundries (including sundries, dry grocery, candy, cooler, freezer, deli, liquor, and tobacco).

Non-Foods (including major appliances, electronics, health and beauty aids, hardware, garden and patio, sporting goods, tires, toys and seasonal, office supplies, automotive care, postage, tickets, apparel, small appliances, furniture, domestics, housewares, special order kiosk, and jewelry).

Fresh Foods (including meat, produce, service deli, and bakery).

Warehouse Ancillary (includes gasoline, pharmacy, optical, food court, hearing aids, and tire installation) and Other Businesses (includes e-commerce, business centers, travel, and other).

Warehouse ancillary businesses operate primarily within or next to the company’s warehouses, encouraging members to shop more frequently. The number of warehouses with gas stations varies significantly by country, and the company has no gasoline business in Korea or China.

The company’s other businesses sell products and services that complement its warehouse operations (core and warehouse ancillary businesses). The company’s e-commerce operations give members convenience and a broader selection of goods and services. The company’s business centers carry items tailored specifically for food services, convenience stores and offices, and offers walk-in shopping and deliveries. Business centers are included in the company’s total warehouse count. Costco Travel offers vacation packages, hotels, cruises, and other travel products exclusively for Costco members (offered in the U.S., Canada, and the U.K.).

The company has direct buying relationships with many producers of brand-name merchandise. The company also purchases and manufactures private-label merchandise, as long as quality and member demand are high and the value to its members is significant.

Membership

The company’s members may utilize their memberships at all of its warehouses and websites. Gold Star memberships are available to individuals; Business memberships are limited to businesses, including individuals with a business license, retail sales license, or comparable document. Business members may add additional cardholders (affiliates), to which the same annual fee applies.

Competition

The company competes on a worldwide basis with global, national, and regional wholesalers and retailers, including supermarkets, supercenters, internet retailers, gasoline stations, hard discounters, department and specialty stores, and operators selling a single category or narrow range of merchandise. Walmart, Target, Kroger, and Amazon are among its significant general merchandise retail competitors in the U.S. The company also competes with other warehouse clubs, including Walmart’s Sam’s Club and BJ’s Wholesale Club.

Intellectual Property

The company has invested significantly in the development and protection of its well-recognized brands, including the Costco Wholesale trademarks and its private-label brand, Kirkland Signature.

History

Costco Wholesale Corporation was founded in 1976. The company was incorporated in 1987.

Country
Industry:
Miscellaneous general merchandise stores
Founded:
1976
IPO Date:
10/22/1993
ISIN Number:
I_US22160K1051
Address:
999 Lake Drive, Issaquah, Washington, 98027, United States
Phone Number
425 313 8100

Key Executives

CEO:
Jelinek, W.
CFO
Galanti, Richard
COO:
Vachris, Ron