Costco 2000 Annual Report Download - page 4

December 14, 2000
Dear Costco Shareholder:
Our Ñscal year 2000 established several milestones:
‚Sales exceeding $31.6 billion, reÖecting a 17% increase over Ñscal 1999, and our Ñrst
time to top the $30 billion mark;
‚Comparable sales increases of 11% for warehouses open for more than one year;
‚Average sales of $101 million per warehouse;
‚Net income of $631 million, compared to operating income of $545 million in 1999
(before unusual accounting charges in 1999 described on page 10), a 16% increase; and
‚32.8 million Costco cardholders worldwide.
Each of these Ñve accomplishments not only set new records for our Company, but each
exceeded our own internal goals and budgets for the year. We are particularly pleased that
we were able to achieve these results while expending considerable resources and costs to
prepare our Company for an accelerated expansion program in Ñscal year 2001 and beyond.
Our entry into new markets such as Texas, the Midwest states and new Southeast states has
required the start-up of three new regional oÇces and three new distribution depots.
Additional resources and costs have been dedicated to the expansion and improvement of
our eCommerce website (www.costco.com); to the marketing eÅorts of our Executive
Membership Program; and to the ongoing activities related to the rollout of the
Costco/American Express co-branded credit/membership cards.
During Ñscal year 2000, we opened 21 new warehouses, compared to 14 in Ñscal year 1999;
and we also replaced four warehouses with new updated facilities in Ñscal year 2000,
compared to seven warehouses replaced the prior year. New markets opened last year
included Memphis, Tennessee; Cincinnati, Ohio; Ft. Meyers and Naples, Florida; Aber-
deen, Scotland; Haydock, England; and Xalapa, Mexico. In Ñscal 2001, our plans call for 36
to 40 new warehouses (18 of which have already opened as of this date) and eight
replacement warehouses (four of which have already opened). New markets this year will
include Dallas/Ft. Worth, Houston and Austin, Texas; Minneapolis, Minnesota; Kansas
City, Missouri; Durham and Charlotte, North Carolina; Huntsville and Birmingham,
Alabama; Charleston, South Carolina; Puebla and San Luis Potosi, Mexico; and Makuhari,
Japan (near Tokyo).
We expect to continue opening new warehouses at a rate of 35 to 40 annually for at least
three years beyond the current Ñscal year 2001, because our business is healthy, and
because we believe Costco presently has a signiÑcant competitive advantage on which we
must capitalize.
The health of our business can be measured not only by the record sales and proÑts, but also
by the record number of new members and membership renewal rates that remain at the
highest level in our history; the cleanest inventory levels and best inventory turn rates ever at
Costco; continued strong expense control at every level of the Company, as well as strong
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