COSTCO WHOLESALE CORP /NEW

COSTCO WHOLESALE CORP /NEW Annual Report - Cleaned & Finalized

Hey there! Let’s break down Costco’s year in a way that’s easy to digest. Imagine we’re chatting over coffee—no fancy terms, just the stuff that matters.

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1. What does Costco do, and how’d they do this year?

Costco is your bulk-buying buddy, selling everything from giant cereal boxes to flat-screen TVs at razor-thin profits. You pay a yearly fee (their secret sauce) to shop there. This year, they expanded to 914 warehouses worldwide (up from 861 in 2023) and kept their "high volume, low markup" strategy humming. Fun fact: Their average warehouse is the size of 2.5 football fields (~147,000 sq ft)!

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2. Show me the money: Are they growing?

• Total revenue: $242 billion (up 7% from last year).
• Profit: $6.3 billion (up from $5.8 billion last year).
• Memberships: Over 70 million households pay to shop there (a record!).
• Same-store sales: Grew 6-7%—solid, but slower than last year’s 10% surge.

The bottom line: Growth continues, but inflation squeezed profits. Bonus: They often sell inventory before paying suppliers, which keeps cash flowing!

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3. Big wins vs. tough spots

Wins:

• Membership fees hit $4.6 billion (up 6%). Cancellations? Rare.
• Opened 23 new warehouses (now 914 globally). China and Europe are growth targets.
• Online sales grew 15% across 8 countries, including Mexico and Australia.

Challenges:

• Inflation raised food/shipping costs. They swallowed some increases to keep prices low.
• Labor costs crept up as wages rose.

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4. Financial health check: Strong or shaky?

Rock-solid!

• Cash stash: $12 billion.
• Debt: Just $8 billion (tiny for a $240B-revenue company).
• Gave back $2 billion to shareholders via dividends/buybacks.

Costco’s like your most responsible friend—always pays bills early and keeps savings for rainy days.

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5. What could go wrong? Risks to watch

• Inflation: Could force price hikes, risking customer loyalty.
• Supply chains: Another COVID-style crisis might empty shelves.
• Labor costs: Rising wages = tighter profit margins.
• Membership fatigue: If renewal rates drop, profits take a hit.

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6. How do they stack up against competitors?

• Sam’s Club: Costco grows faster and has fancier member perks.
• Amazon: Lags in delivery speed but wins on in-store deals.
• Secret weapon: Their depots (massive distribution hubs) slash shipping costs vs. rivals.

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7. What’s next?

• Global expansion: More warehouses in China, Europe, and the U.S.
• Fee hike? Membership costs haven’t risen since 2017—could boost profits if they pull the trigger.
• Cost control: Squeezing suppliers for better deals to fight inflation.

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8. Market trends in their favor (or not)

• Good: Inflation makes bargain-hunting cool again.
• Bad: Fuel/energy costs could eat into profits.
• Wild card: New labor laws might raise operating costs.

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Key Takeaways for Investors

Why consider Costco?

• 🟢 Loyalty pays: 70M+ members stick around for bulk deals and $5 rotisserie chickens.
• 🟢 Financial fortress: Minimal debt, $12B cash, and a habit of sharing profits with shareholders.
• 🟢 Global growth: Expanding warehouses and online sales show long-term potential.

Watch out for:

• 🔴 Inflation risks: Could hurt margins if prices rise too much.
• 🔴 Membership dependency: 90% of profits come from fees—renewal rates are critical.

Verdict: Costco’s a steady, well-run ship in rocky seas. If you believe bulk shopping and membership loyalty are here to stay, it’s a solid long-term hold. Just don’t expect explosive growth—this is more tortoise than hare.

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Final note: Costco’s report was transparent about challenges and opportunities. No major red flags, but keep an eye on inflation and membership trends.