Costco 2010 Annual Report Download - page 7

either non-existent or in their infancy at the beginning of the decade, and it is exciting to consider
where we will go in the next ten years. For example, we began our e-commerce business (costco.com)
in November 1998 with a limited offering of products. Since then we have developed e-commerce into
a thriving operation that carries around 4,000 skus, complements our warehouse offerings and drives
sales in both environments. Our performance picked up in 2010 after a slight reduction in sales in
2009, and we showed particularly strong growth in Canada (costco.ca). Our total e-commerce
operations realized nearly $2 billion in sales and a 15% increase in profits in fiscal 2010. Within the
next 10 years we look to expand this business on a global scale and envision great potential for sales
and profit growth.
Our warehouse ancillary businesses also continue to be strong performers. These operations not only
set us apart from our competition, but also bring in substantial income and help drive incremental sales
in our buildings. Encompassing our food courts, mini-photo labs, optical, hearing aid, pharmacy and
gas station operations, many of these departments showed good sales and profit increases in 2010.
Increases in gas prices, for example, helped us realize a 25% increase in gasoline sales, which came
in at just over $6 billion. Our dollar-fifty hot dog and soda combination still reigns supreme in our food
courts, generating sales of more than $140 million world-wide in 2010. Our pharmacies continue to be
acclaimed around the country for their low prescription prices. We now have pharmacies in 513
locations, which generated sales of over $3.6 billion last year, an increase of ten percent, and
increased profits as well, thanks in part to the efficiencies of our three central fill facilities that service
most of our West Coast warehouses and reduce the cost of a prescription renewal by almost half.
Additional central fill locations are in our long-range plans.
We are cautiously optimistic about the economic outlook – and our business – for 2011. We know will
have to work harder than ever to continue our success. We enter the second decade of the 21st
century poised to expand our operations, increase our sales, reduce our costs, and continue to lead
our industry while rewarding you, our shareholders. We will accomplish these goals by doing what we
have always done – concentrate on our mission to continually bring quality goods and services to our
members at the lowest possible prices, while being responsible corporate citizens, taking care of our
members and our employees, and respecting our vendors. We are in business for the long haul, and
we are committed to continually building a company that will be here fifty, sixty and more years from
now. We owe that to our shareholders, our members, our employees, and our suppliers.
We appreciate the trust you have placed in our management team, and on behalf of our 150,000
employees around the world, we thank you for your support. Please join us in anticipating continued
success in 2011. We hope to see many of you at our Annual Meeting of Shareholders on January 27,
2011, in Bellevue, Washington.
We wish you, your associates and your families joy and peace over the holiday season. May we all
greet the new year with optimism for the future.
Warm Regards,
Jeff Brotman
Chairman of the Board
Jim Sinegal
Chief Executive Officer
Craig Jelinek
President & COO
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