Costco 2013 Annual Report Download - page 6

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success on a global basis. We also see growth opportunities for Ecommerce expansion
as we continue to expand our members’ shopping opportunities beyond the walls of our
warehouses. New Ecommerce website platforms for our U.S. and Canada operations
were launched in the fall of 2012, and mobile applications were operational shortly
thereafter. Our United Kingdom website was launched in fiscal year 2013; and our
Mexico website was added just after fiscal year-end. By leveraging technologies, we are
able to offer our members an even wider assortment of merchandise at the values and
quality they have come to expect from Costco.
We expect to invest $2.4 billion in capital expenditures in 2014, including real estate
purchases, construction expenditures, enhancements to our existing facilities, and
furthering the modernization of our information systems and related activities. We
expect to fund all of these activities with existing cash and cash flow from our
operations.
We are very aware of our responsibility to build and maintain our operations in an
energy-efficient, sustainable and environmentally responsible manner. We continue to
pursue opportunities to reduce our carbon footprint while at the same time decrease the
costs of our operations. These efforts are not mutually exclusive, but are sometimes
synergistic: the more efficient we can become the more we can reduce costs and
reduce our carbon footprint. This is our challenge and our opportunity – to profitably
grow our business in an environmentally responsible manner in the years to come.
The performances of many of our warehouse ancillary businesses were noteworthy in
fiscal 2013, with nearly all of these departments showing year-over-year increases in
sales and profits. Our 414 fueling stations in the U.S. and Canada increased sales and
profits despite a volatile gasoline market. The Costco Food Court’s limited menu didn’t
limit sales, which continued to grow in 2013. Offerings included our famous hot dog and
soda combination (still $1.50), pizza (whole or by the slice) and the turkey-provolone
sandwich.
Costco Optical continues to receive high marks for the quality and price of our designer
frames and brand-name contact lenses, as well as the professionalism and expertise of
our opticians and technicians. With 614 optical centers in operation worldwide, our
growth rate in profits surpassed the rate of sales growth in 2013. Likewise, our Costco
Hearing Aid Centers, now in more than 500 warehouses, increased profitability at a
higher rate than the rate of sales increase. Such results were aided by the newest
version of our highly rated, top-of-the-line Kirkland Signature™ digital hearing aids.
Contributing to these successes, Costco Pharmacies also did well, particularly in over-
the-counter sales, experiencing strong sales and profit increases, having added several
Kirkland Signature™ products in 2013. Our pharmacies and highly trained professional
pharmacists repeatedly receive accolades for customer service and extraordinary
pricing – often offering prices for brand-name and generic prescriptions at a fraction of
those charged by national and regional drugstore chains.
At its core, Costco is a global company of exceptional merchants and operators who
strive to continually increase efficiencies and reduce costs as they source, distribute,