Costco 2009 Annual Report Download - page 12

Ancillary businesses within or next to our warehouses provide expanded products and services and
encourage members to shop more frequently. The following table indicates the number of ancillary
businesses in operation at fiscal year end:
2009 2008 2007
Food Court and Hot Dog Stands ........................ 521 506 482
One-Hour Photo Centers .............................. 518 504 480
Optical Dispensing Centers ............................ 509 496 472
Pharmacies ......................................... 464 451 429
Gas Stations ........................................ 323 307 279
Hearing-Aid Centers ................................. 303 274 237
Print Shops and Copy Centers ......................... 10 7 8
Car Washes ........................................ 2 2 1
Number of warehouses ............................... 527 512 488
Costco Mexico, our 50%-owned joint venture, operated 32 warehouses, under our oversight, at
August 30, 2009. The Costco Mexico warehouses are not included in the table above as Costco
Mexico is accounted for using the equity method of accounting for investments.
Our electronic commerce businesses, costco.com in the U.S. and costco.ca in Canada, provide our
members additional products generally not found in our warehouses, in addition to services such as
digital photo processing, pharmacy, travel, and membership services.
Our warehouses accept cash, checks, certain debit cards, American Express and a private label
Costco credit card. Losses associated with dishonored checks have been minimal, as members who
have issued dishonored checks are identified and prevented from making payments at the point of sale
until restitution is made.
We have direct buying relationships with many producers of national brand-name merchandise. We do
not obtain a significant portion of merchandise from any one supplier. We have not experienced any
difficulty in obtaining sufficient quantities of merchandise, and believe that if one or more of our current
sources of supply became unavailable, we would be able to obtain alternative sources without
substantial disruption of our business. We also purchase selected private label merchandise, as long
as quality and customer demand are comparable and the value to our members is greater as
compared to name brand items.
Certain financial information for our segments and geographic areas is included in Note 12 to the
accompanying consolidated financial statements included in this Report.
We report on a 52/53-week fiscal year, consisting of thirteen four-week periods and ending on the
Sunday nearest the end of August. The first three quarters consist of three periods each, and the
fourth quarter consists of four periods (five weeks in the thirteenth period in a 53-week year). There is
no material seasonal impact on our operations, except an increased level of net sales and earnings
during the winter holiday season. References to 2009, 2008, and 2007 relate to the 52-week fiscal
years ended August 30, 2009, August 31, 2008, and September 2, 2007, respectively.
Membership Policy
Our membership format is designed to reinforce customer loyalty and provide a continuing source of
membership fee revenue, which allows us to offer lower prices. Members can utilize their memberships
at any Costco warehouse location in any country. We have two primary types of members: Business
and Gold Star (individual). We continue to experience strong member renewal rates, currently at 87%.
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