Costco 2008 Annual Report Download - page 5

We continue to operate top-rated optical centers, and our pharmacies showed strong sales and profit
increases again in 2008. We receive national acclaim for our low prescription drug prices; and our
member-friendly approach to Medicare Part D in the U.S. makes things easier and provides great
value to our senior citizens. After successfully operating a state-of-the-art central prescription fill facility
in the Northwest for the past two years, we are planning to open additional central fill operations in
Northern and Southern California in fiscal 2009. These centers help us substantially reduce the cost of
dispensing prescriptions.
Every day is “High Theatre” in a Costco warehouse, with every aisle and every employee “showtime
ready” to delight our members and, hopefully, exceed their expectations. This attention to detail is one
of the many things that we believe sets us apart from our competition.
Shoppers enjoy being able to save on the basics and take advantage of high-end luxury items; and we
provide plenty of both with great prices and excellent quality. We pride ourselves on our trend-setting
merchandise mix, where shoppers can find everything from bath tissue to multi-carat diamond rings.
People come to Costco for the treasure hunt – the search for that special item among our new and
ever-changing merchandise and services presentations. With nearly fifty-seven million loyal Costco
members, Costco has a following that is special in retail. Our members are intensely loyal, and our
membership renewal rate continues at its highest level ever – 87%. Among our Executive Members,
who typically shop more often and spend more, our renewal rate is even higher. Our annual
membership income represented more than $1.5 billion in fiscal 2008; helping keep our cost structure
low and our members loyal.
Costco has what people need and what they want; and even in tough economic times, that translates
into strong demand for Costco warehouses in communities all over the world. We have found that, far
from being saturated, our marketplace continues to expand. Our long term goal continues to be the
nearly doubling the size of our company over the next ten years; and we believe if we do it right,
moving into new communities and infilling in current markets, we will see demand for our business
continue to grow. We currently operate 550 warehouses: 403 in the U.S. and Puerto Rico, 76 in
Canada, 31 in Mexico, 21 in the UK, six in Korea, five in Taiwan and eight in Japan.
We opened 35 new warehouses in fiscal 2008 (including nine relocations), many in existing markets.
Our 2008 U.S. openings included Maplewood, Minnesota; Colorado Springs, Colorado; Middleton,
Wisconsin; Tallahassee, Florida; Woodland, California; West Albuquerque, New Mexico; Omaha,
Nebraska; Selma, Texas and Montgomery, Alabama. Additionally, we continued our successful infilling
in existing markets in fiscal 2008, adding new units in Parker and Sheridan, Colorado; Manteca (East
Bay area) and San Dimas, California; Manahawkin (South Shore), New Jersey; Gig Harbor (Puget
Sound area), Washington; and Columbia (D.C. area), Maryland. In Canada, we opened new
warehouses in Medicine Hat, Alberta; South Winnipeg, Manitoba; Richmond Hill (Greater Toronto
area), Ontario; and Candiac (Greater Montreal), Quebec. Internationally, we entered new markets in
Iruma and Sapporo, Japan; Puerto Vallarta, Mexico; Cardiff, Wales; and Taichung, Taiwan. We also
opened in Ilsan, Korea, northwest of downtown Seoul. We relocated nine warehouses into new larger
and better-located buildings in fiscal 2008, enabling us to better serve our members. These included
units in Antioch, Visalia, Victorville and Chico, California; Brick Township, New Jersey; Mesa, Arizona;
Kendall, Florida; Union Gap, Washington; and Willingdon, British Columbia.
In preparation for the 2008 holiday season, we opened eight new warehouses since fiscal 2009 began
in September: in Peterborough, Ontario in the greater Toronto area; the high-end Galleria area of
Houston, Texas; Pocatello, Idaho; Covington, Washington, a southern suburb of Seattle; Brandywine,
Maryland, in the Washington DC/Arlington metro area; St. Charles, Illinois, in greater Chicago; and
Croydon, England, in south London. We also opened a relocated building in Bloomfield, Michigan and
are in the process of converting our downtown Las Vegas warehouse into a Costco Business Center to
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