Costco 2012 Annual Report Download - page 5

Costco is now one of the largest retailers in the U.S., and seventh-largest in the world. More important
than any ranking, however, is our ability to remain focused on the core values of our business: driving
down expenses; offering our members great products and services at the lowest possible prices; and
being a responsible corporate citizen. We are proud to accomplish this while providing great wages
and benefits to our employees. It is a model that will allow for continued growth and opportunities well
into the future.
The loyalty of Costco members is critical to our success. Our members continue to recognize the
Costco value proposition: great prices; great quality; and outstanding service. Our record renewal rates
in 2012 were particularly encouraging considering that in November 2011, we increased membership
fees for the first time in more than five years.
Ultimately, increasing sales is critical to our success. In 2012, our annual sales per warehouse
remained at industry-leading levels, as did our comparable warehouse sales increases. The number of
warehouses that exceeded $200 million in annual sales volume rose from 93 locations in 2011 to 134
locations during 2012; and eight of those warehouses exceeded $300 million in annual sales.
Member service has always been an area of emphasis for our employees. The way we treat our
members defines who we are – it is an essential part of our corporate culture: Take Care Of Our
Members. When people pay for the right to shop, they expect and deserve our full attention and
respect – and we strive to do this with each and every member visit. In this vein, our employees are
Costco’s most important asset; and their attention to “member service” is one of our greatest strengths.
Costco opened 17 locations in fiscal 2012, including the reopening of our Tamasakai warehouse in
suburban Tokyo, which was significantly damaged by the Tohoku Earthquake in March 2011. New
warehouses were opened in Bucks County, Pennsylvania; Frisco, Texas; Pewaukee, Wisconsin;
Augusta, Georgia; Yawata Kyoto, Zama, and Kobe, Japan; Ancaster, Ontario (a relocation); Pharr,
Texas; Huntington Beach, California; Coralville, Iowa; Chicago (South Loop), Illinois; Pittsfield
Township, Michigan; Sarasota, Florida; Taoyuan, Taiwan and Ulsan, Korea.
In the first four months of fiscal 2013, prior to calendar 2012 year end, we opened 14 additional new
warehouses: West Edmonton, Alberta; West Fargo, North Dakota; Baxter and Rochester, Minnesota;
Spanish Fork, Utah; Farragut, Tennessee; Concordville, Pennsylvania; East Peoria, Illinois; Sun
Prairie, Wisconsin; Drummondville, Quebec; Oshawa, Ontario; Washington, D.C.; Leicester, England;
and Gwangmyeong, Korea. Including these 14 openings, we plan to open approximately 30 new
warehouses in fiscal 2013.
Costco also continues to expand its ancillary business offerings, including pharmacies, optical and
hearing aid centers, and gas stations. These businesses are great examples of how we can achieve
high standards of excellence, drive more sales and profitability, and enhance the value of a Costco
membership.
Costco pharmacies, now a $4+ billion retail business, are renowned for their value; and we regularly
receive notes from members complimenting both our pharmacists and technicians. Costco’s low prices
on both brand-name and generic prescriptions are well-known, and we have gained our members’ trust
for their healthcare needs. Such a relationship is invaluable when it comes to health-related services,
and we have extended that trust into our optical and hearing aid businesses, as well.
Costco Optical operated in 589 locations during 2012, selling over three million pairs of prescription
glasses and contact lenses, and generating sales of nearly $900 million. The optometrists working in
our optical departments are among the highest-rated in the industry, and along with our trained
opticians offer a level of care and service that is unmatched.
3