Costco 2013 Annual Report Download - page 19

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17
If we do not successfully develop and maintain a relevant multichannel experience for our
members, our results of operations could be adversely impacted.
Multichannel retailing is rapidly evolving and we must keep pace with changing member expectations and
new developments by our competitors. Our members are increasingly using computers, tablets, mobile
phones, and other devices to shop online. As part of our multichannel strategy, we are making technology
investments in our websites and recently launched a mobile application for mobile phones and other electronic
devices. If we are unable to make, improve, or develop relevant member-facing technology in a timely manner,
our ability to compete and our results of operations could be adversely affected.
Our inability to attract, train and retain highly qualified employees could adversely impact our
business, financial condition and results of operations.
Our success depends to a significant degree on the continued contributions of members of our senior
management and other key operations, merchandising and administrative personnel, and the loss of any
such person(s) could have a material adverse effect on our business. Other than an annual agreement with
our CEO, Mr. Jelinek, we have no employment agreements with our officers. We must attract, train and retain
a large and growing number of highly qualified employees, while controlling related labor costs and
maintaining our core values. Our ability to control labor costs is subject to numerous external factors, including
regulatory changes, prevailing wage rates, and healthcare and other insurance costs. We compete with
other retail and non-retail businesses for these employees and invest significant resources in training and
motivating them. There is no assurance that we will be able to attract or retain highly qualified employees
in the future, which could have a material adverse effect on our business, financial condition and results of
operations. We do not maintain key man insurance.
Failure to meet market expectations for our financial performance could adversely affect the
market price and volatility of our stock.
We believe that the price of our stock generally reflects high market expectations for our future operating
results. Any failure to meet or delay in meeting these expectations, including our comparable warehouse
sales growth rates, margins, earnings and earnings per share or new warehouse openings could cause the
market price of our stock to decline, as could changes in our dividend or stock repurchase policies.
Market and Other External Risks
We face strong competition from other retailers and warehouse club operators, which could
adversely affect our business, financial condition and results of operations.
The retail business is highly competitive. We compete for members, employees, sites, products and services
and in other important respects with a wide range of local, regional and national wholesalers and retailers,
both in the United States and in foreign countries, including other warehouse club operators, supermarkets,
supercenter stores, department and specialty stores, gasoline stations, and internet-based retailers. Such
retailers and warehouse club operators compete in a variety of ways, including merchandise pricing, selection
and availability, services, location, convenience, and store hours. The evolution of retailing in online and
mobile channels has improved the ability of members to comparison shop with digital tools, which has
enhanced competition. Our inability to respond effectively to competitive pressures, changes in the retail
markets and member expectations could result in lost market share and negatively affect our financial results.
Some competitors may have greater financial resources, better access to merchandise and greater market
penetration than we do.
General economic factors, domestically and internationally, may adversely affect our business,
financial condition and results of operations.
Higher energy costs, inflation, levels of unemployment, healthcare costs, consumer debt levels, foreign
currency exchange rates, unsettled financial markets, weaknesses in housing and real estate markets,