Costco 2001 Annual Report Download - page 5

rollout of the Costco/American Express co-branded membership/credit cards have been great. As of this writing,
nearly 1.9 million Costco members have signed up for the co-branded credit cards, which also serves as a Costco
membership card; and we are proud to be the only retail company to offer these unique cards. Last year, these
members earned millions of dollars in rebate rewards on their American Express Cash Rebate co-branded cards,
providing significant additional value to being a Costco member.
In terms of merchandise sales, the foods and sundries departments, and particularly fresh foods, showed
consistent, strong sales growth in fiscal 2001; while our hardlines and softlines sales increases, especially sales of
discretionary, high-ticket items, were impacted by the weakening economy. Fiscal 2001 sales were also helped by
strong sales comparisons in our ancillary departments. We had particularly strong sales increases in our
pharmacy, optical and food court departments; and at fiscal year-end, had 139 high-volume gas stations in
operation. The combined sales of these ancillary departments in fiscal 2001 exceeded $3 billion—nearly 10% of
our total sales—and grew at over twice the rate of total company sales growth.
We always consider expense control to be our biggest challenge. That was true this past year, and will again
be the case in the new fiscal year. We will continue to question expenses at every level of our Company. We
expect the leveraging of our sales growth and maturing of our many new warehouses will begin to reap benefits,
as will the synergies derived from consolidating our Canadian Division administrative offices in Ottawa. Our
shareholders can be certain that we are committed to evaluating and challenging expenses throughout the
Company and bringing these cost savings to the bottom line. An example worth mentioning is the focus on
energy conservation and exploring ways to reduce energy costs this past year. This has led to a reduction in
energy consumption by nearly 15% throughout the Company, which is helping to mitigate increasing energy
costs in many markets.
We would also like to share with you how Costco was directly involved in the relief efforts following the
tragic attacks of September 11th in New York and Washington D.C. Our Pentagon City and New York area
buildings, all of which were within eyesight or minutes away from the devastation that occurred, immediately
began donating vital supplies to more than a dozen organizations, including fire and police departments, Red
Cross, Staten Island Relief, Salvation Army, and others. Costco also donated $1 million directly to the New York
Trade Center Relief Fund and $100,000 to support the families of those lost at the Pentagon. In addition, each
U.S. and Canadian warehouse began accepting member and employee donations at its cash registers, raising in
excess of $3 million in the several weeks following September 11th, all of which was sent to the appropriate relief
agencies.
In summary, we want to thank all our fellow employees—now numbering over 90,000 worldwide—for their
hard work and dedication; and you, our shareholders, for your on going support. We believe Costco made strong
progress in fiscal 2001 and, with its strong financial position, experienced management team and dedicated
employees, is well positioned for long-term growth, profitability, and increased shareholder value.
We look forward to seeing many of you at our Annual Meeting of Shareholders on January 30th in San
Francisco. Best wishes for a happy, healthy and peaceful Holiday Season and New Year.
Cordially,
Jeff Brotman Jim Sinegal
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