Costco 2010 Annual Report Download - page 5

Coventry, England; and Okotoks, Alberta. Eight of these new warehouses had opening day sales in
excess of $500,000, and three of them brought in sums approaching a million dollars. While the number
of openings this past year was small, their average annualized sales exceeded $94 million per building.
In the run-up to this year’s holiday season, we also opened ten new units this Fall in our new fiscal
year 2011, in the following communities: a San Diego, California Business Center; and traditional
Costco warehouses in Rocky View, Alberta; Woodmore, Maryland; Ft. Oglethorpe and Brookhaven,
Georgia; Melrose Park, Bolingbrook and Mettawa, Illinois; Burnsville, Minnesota; and East Vancouver,
Washington. We anticipate opening an additional 16 to 18 new warehouses prior to the end of fiscal
2011, bringing the potential total openings for fiscal 2011 to 28. Most of these are also infill buildings,
and include units in the U.S., Canada, Japan, Taiwan, Australia, Korea, and England. We have been
very busy reviewing potential sites and securing new properties during the economic downturn and
have a large pipeline of promising new locations to be developed over the next few years.
In mid-2010 we increased our annual dividend to shareholders by 14%, to $.82 per share. We also
bought back nearly 10 million shares at a cost of $568 million. Since inception of our stock buy-back
program in 2005, we have bought back nearly 100 million shares of Costco stock (almost 20% of the
common shares outstanding) at an average price of $54.39.
Costco is currently the third largest retailer in the United States and the eighth largest retailer in the
world. We are the 25th largest company in the Fortune 500, and we feel confident in our potential for
future growth opportunities. One of our many strengths is our strong entrepreneurial culture that
encourages our employees and management teams to be creative and contribute new ideas. This
gives us the opportunity to be a company that adheres to its primary focus and game plan while also
constantly evolving and improving. This winning combination brought us successfully through another
demanding year of challenges for retail businesses. Fiscal 2010 brought a stalled economy, continued
softness in high-ticket and discretionary item purchases, and rising health care costs. Nevertheless, we
believe Costco’s extraordinary culture made us well-qualified to build market share in these tough
times, and that is exactly what we continue to do.
We believe that the Costco management team is the strongest and most cohesive in the industry,
composed primarily of people who grew up in the retail business and who have worked together for
decades. Most have worked in a variety of positions, at various functions and managerial levels within
our Company, making them well-versed in many aspects of our business. All of our senior executives
average over 25 years experience with Costco; and that helps us remain true to our core objectives.
This also gives us a remarkable talent pool of highly qualified and talented management. Be assured
that as some members of our original executive team near retirement, we have an outstanding and
experienced group of executives poised and ready to take on additional responsibilities. Our entire
executive management team helps ensure continuity of leadership and has been very successful in
developing leaders for the future of Costco.
This year we had a few changes at the executive level. In March, we handed the presidential reins over
to Craig Jelinek, a highly seasoned retail executive with 35 years experience in the industry, 26 of them
serving in various high-level positions at Costco, most recently as Executive Vice President, Chief
Merchandising Officer. Craig is President and Chief Operating Officer, and also joined the Company’s
Board of Directors. Doug Schutt, formerly Executive Vice President, Northern and Midwest Operations,
has returned to his merchandising roots as Executive Vice President, Chief Merchandising Officer.
Additionally, Dick DiCerchio, Senior Executive Vice President, Chief Operating Officer, retired in June
after serving 27 years in senior management positions within the Company. Dick was part of our
original management team and has contributed extensively in virtually all aspects of the innovation and
growth of Costco since its beginning. We are deeply indebted to Dick for his insights and leadership;
he will be sorely missed.
3