Costco 2014 Annual Report Download - page 6

Over the last few years we have made significant investments to modernize and
enhance our information systems. This is an extensive multi-year effort to replace
and/or upgrade our legacy systems and infrastructure to support our future growth.
While this investment increased our SG&A (selling, general and administrative)
expenses in 2014, and will continue to impact SG&A, we expect long-term benefits in
many areas of our business, with increased efficiencies in a number of our day-to-day
operations.
We are already four months into fiscal 2015 and our current plan is to open up to thirty-
four new warehouses (including three relocations), which will increase our total
warehouse square footage another five percent. Planned openings include twenty in the
U.S.; four in Mexico; three in Japan; two each in Australia and Korea; and one each in
Canada, the U.K. and Taiwan. In the run-up to this year’s holiday season, we have
opened nine of these new warehouses, including one relocation.
As we continue to grow our global business, we remain mindful of both the opportunity
and the responsibility to conduct our business in a sustainable manner. Our
commitment to the sustainable construction and operation of our facilities encompasses
many activities: enhancing our warehouse energy management systems; expanding our
packaging design initiatives; and further developing our recycling and waste stream
management systems. For example, we’re now operating rooftop solar photovoltaic
systems in 83 of our warehouses, which are projected to generate 72 million kWh of
electricity per year. We have further reduced the amount of waste we send to landfills
through the use of additional recycling and composting measures; and have expanded
the grease recovery systems in our rotisserie chicken operations.
Another aspect of sustainability is the strategic management of procuring items –
Kirkland Signature™ as well as other international brands – to meet the needs of our
projected growth, domestically and internationally. We are partnering with key suppliers
in over 60 countries worldwide to evaluate and plan for the continued availability of
exceptional merchandise in the coming years.
Involvement in and support for the communities where our employees live and work is
an integral part of our company’s identity. United Way, Children’s Miracle Network
Hospitals, Communities in Schools and the Costco Scholarship Fund are just a few of
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During 2014 we opened thirty new Costco warehouses: seventeen in the U.S., including
our first openings in South Dakota and Louisiana (we’re now in forty-three states), and
thirteen in our international markets, ending fiscal 2014 with 663 locations in operation
worldwide. These openings increased our warehouse square footage by five percent to
over 95 million square feet. International openings continued our global expansion with
new warehouses in seven countries: Mexico (Monterrey III), Canada (St. Albert, Alberta;
Central Mississauga, Ontario; and Guelph, Ontario); Australia (Ringwood, Crossroads,
and North Lakes); Japan (Hitachinaka and Izumi); Korea (Euijeongbu and Cheonan);
the United Kingdom (Hayes, England); as well as our first warehouse in Seville, Spain.