Costco Corporate Office Contacts – Unique Details On This Issue..

The purpose of this memo is to analyze Costco’s performance in comparison to Sam’s Club and BJ’s.

Costco Wholesale Corporation is actually a wholesale club that will require customers to get annual memberships in order to look at their stores. Costco’s main competitors were Sam’s Club and BJ’s Wholesale. Costco purchased Price Club in 1993 which enabled it to survive in the competitive wholesale industry. In addition, it adopted a method which was different as compared to its major competitor, Sam’s Club This enabled costco address to be the biggest wholesale club in the industry in 2001.

I. Costco’s Performance in Relation to BJ’s

Once I compared Costco’s total revenues with BJ’s total revenues in Exhibit 5 of FIN 197 Seminar in Finance case book, I discovered that Costco’s total revenue were increasing at an increasing rate except for year 2000 to 2001. BJ’s on the other hand, had growing revenues until 1999 when their revenues then started to grow at a declining rate.

Costco has a higher membership fee and more which enabled Costco’s total revenue to be more than BJ’s. This membership fee is very important because it is the key contributor to the company’s bottom line since sales excluding membership fees barely covers operating expenses. Costco also offers more warehouses and far higher sales per store. Costco has warehouses in numerous international locations while BJ’s only have warehouses in america. However, Costco features a lower operating and gross margin which implies that BJ’s has better operations and better product prices than Costco. Costco’s inventory turnover ratio is outstanding as it is larger than BJ’s. This clearly implies that Costco has an excellent operating efficiency.

II. Costco’s Performance in terms of Sam’s Club

Sam’s Club, on the other hand, has more members and warehouses in comparison with which makes it Costco’s largest competitor. However, Costco had larger total revenues, sales per store and operating income because of its strategy. This is because Costco is much more internationally dispersed in comparison to Sam’s Club since it has more warehouses in international locations. I am just struggling to compare Costco’s financial statement performance with Sam’s Club because Sam’s Club details are joined with Walmart.

III. Costco’s core strength and strategy

Costco pursues the strategy of focusing on lowering the device cost of goods and buying few Stock Keeping Units (SKUs) from the vendors which enable production savings.

Costco’s core strength is made to provide it with higher total revenues and to create value to its customers. Their core strength can be split into two:

• Targeting a wealthier group of small business owners and middle class shoppers which differs from Sam’s Club.

• Refusing to mark up products more than 14 percent within the distributor’s price

Costco’s technique is really efficient in providing it having a competitive edge over its competitors BJ’s and Sam’s Club. This is surely a long-term value enhancing strategy because would be to create value to their customers. They vpaisq definitely obtain many loyal and satisfied customers who do not mind paying a higher membership fee to sign up for Costco. Costco is another very ethical company since they are not implementing a method which serves to lower their costs and cheat customers with their cash in an indirect way.