...Common Size Financial Statements Net Income for fiscal 2001, decreased 4.59% to 602$, or 1.29 per diluted share, .31%, or 1.29 per diluted share, from 631$, or 1.35 per diluted share during fiscal year 2000. Net sales for fiscal 2001, increased 7.95% to 34,137$ in fiscal 2001 from $31,621$ in fiscal 2000. This increase was due to Opening more 41 new stores globally and closed 7 during fiscal 2001. Changes in prices did not materially impact sales levels. Comparable sales, that are sales in warehouses open for at least a year, increased at a 7.37% annual rate in fiscal 2001 compared to a 14.69% annual rate during fiscal 2000. Costco Membership fees increased from 25$ in fiscal 1986 to to 45$ in fiscal 2002. Membership fees and other revenue increased 21.54% to 660$, or 1.93% of net sales, in fiscal 2001 from 543$, or 1.72% of net sales. This increase was primarily due to the saving costo was able to pass on to customers and due to additional membership sign-ups at the 91 new warehouses. Selling, general and administrative expenses as a percent of net sales increased to 9.17% during fiscal 2001 from 8.72% during fiscal 2000, due to a number of a factors, including an increase in the Wages and benefits in fiscal 2000; continued expansion of the Company’s co-branded credit card program; and higher expenses associated with an increase in new warehouse openings year-over-year (a net of 41 and 27 warehouses opened in fiscal 2001 and 2000, respectively) where expense ratios...
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...STANFORD GRADUATE SCHOOL OF BUSINESS CASE: A-186A DATE: 06/19/03 CosTco WHOLESALE CORPORATION FINANCIAL STATEMENT ANALYSIS (A) INTRODUCTION Margarita Torres first purchased shares in Costco Wholesale Corporation in 1997 as part of her personal investment portfolio. Between 1997 and 2002, she added slightly to her holdings from time to time when the company sold stock for what she felt was a reasonable valuation, and up to that time she did not sell any of her shares. Having watched Costco grow from 265 warehouses to 365 worldwide, and from sales revenue of $21.8 billion to $34.1 billion, she wondered what factors led to such successful growth. She also wanted to determine whether those factors would hold consistent going forward. At this point, Costco was one of a special breed of retailers called wholesale clubs. Unlike other retailers, wholesale clubs required that customers purchase annual memberships in order to shop at their stores. Costco operated a chain of warehouses that sold food and general merchandise at large discounts to member customers. The company was able to maintain low margins by selling items in bulk, keeping operating expenses to a minimum, and turning inventory over rapidly. Costco’s closest competitors were SAM’S Club (a division of Wal-Mart) and BJ’s Wholesale, which both operated as wholesale clubs. Other competitors included general discounters (such as Wal-Mart), general retailers (such as Sears), grocery...
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... ENVIRONMENTAL FACTORS Environmental Factors on Marketing Decisions of Costco Wholesale Corporation Environmental factors are made up of all the factors and activities that have a significant effect on managing a business. These factors have a strong influence on operating any business, particularly in marketing options (Pagell & Halperin, 2000). Environmental factors cause risks to the achievements of any business and to deal with these factors, a firm must improve its main skills and create good methods (Staff, 2009). There are different components that would have a great impact on these latest services provided by the firm. After acknowledging these components, the firm must create a strategy. In his book, David jobber explains that with the support of this observation, the business becomes more successful in applying the different methods (Jobber, 2001). One of the major organizations in the trade business is Costco Wholesale Corporation; this company was established by James Sinegal and Jeffrey Brotman (Costco Wholesale Corporation, 2009). On the start of the sales volume, the business is regarded to be among the world's major membership warehouses (Costco: About Company, 2009). This corporation has the rank of one of the 5 biggest businesses in the U.S. in retail industry. Issaquah (Washington) is where the H.Q. of the corporation is located in the U.S. (Costco Wholesale Corporation Reports January Sales Results and Comments on Earnings Outlook...
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...Case Study Analysis 1: Costco Wholesale Corp: Mission, Business Model and Strategy MGMT 670: Strategic Management Capstone June 26, 2011 Business Case Study: Costco Wholesale Corporation Introduction As a student in MGMT 670: Strategic Management, the capstone course for the Management track at the University of Maryland University College, I was asked to prepare a case study analysis of Costco Wholesale Corporation. Costco is one of the world’s leading wholesale retailers with annual sales of $76.3 Billion for fiscal year (FY) 2010, which is an increase of 9% from the previous year ($69.9 billion). In addition, its earnings per share increased to $2.92, an annual increase of 18% from the previous year. (Costco Financial Report, 2011) This increase is an all time high for the company thereby solidifying its place as a leader in the wholesale industry. Costco and its Business Strategy From inception, Costco’s business strategy has been to offer limited products (4000) at lower prices coupled with great values while keeping overhead costs low. In its main product line Costco has about 3,000 products that are present in the stores at all times and 1000 products that are ever-changing. These 1000 lines allow Costco buyers/merchandisers to hunt for items that will keep customers coming back to see what is new or fresh in the stores. These items help Costco create the “treasure hunt” environment that will keep customers coming back to the store more frequently. The motivation...
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...Performance Analysis of Costco Wholesale Corporation xxxx Strayer University FIN 534: Financial Management Professor: xxxx June 11, 2012 Costco Wholesale Corporation Higher interest rates, levels of unemployment, consumer debt levels, and unsettled financial markets are general economic factors that can adversely affect the company’s financial performance. These key elements play an important role in how a company chooses to move forward operationally and financially. Therefore, it’s imperative that we as investors understand a company’s business strategy as well as have a general knowledge of issues which may impact their decisions. Prior to investing, we should review a company’s operations, stock price, and their ratios to decide if a firm a financially stable to meet their obligations. Company Overview Costco Wholesale Corporation and its subsidiaries (Costco) began operations on September 15, 1983 in Seattle, Washington. James Sinegal and Jeffery Brotman founded it. In October 1993, Costco merged with The Price Company, which established the membership warehouse model, to form Price/Costco, Inc. In January1997, the company changed its name to Costco Wholesale and all Price Club locations were rebranded as Costco Companies, Inc. August 30, 1999, the company was reincorporated and its name was changed to Costco Wholesale Corporation. To date, the company has grown to become the largest warehouse club retailer and the second largest general retailer...
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...ASSIGNMENT QUESTIONS: Costco Wholesale Corp.: 1. What is Costco’s business model? Is the company’s business model appealing? Why or why not? Costco business model is meant to maximize efficiency by depending on a high sales tied with quick inventory earnings. Costco’s concept is base on offering members the lowest price on a limited selection of national brands, the warehouse format maintain a low cost rate as they buy and sell items in bulk. Costco memberships keep customers loyal, because it accumulate most of its profit from membership fees, they’re able to sale their goods at a very low markup price. Overall Costco’s business model is very appealing, while being positioned to grow its business for the foreseeable future, it has many benefits. Example, efficiency inventory combine with quicker inventory turnover will reduce Costco cots of selling goods. High sales volumes combine with quick inventory allows Costco to sell and receive cash for goods before it has to pay for any of its merchandise, which allows Costco to finance a large percentage of its inventory through the payment terms provided by its vendor rather than having to maintain a sizable working capital to pay for its merchandise. It’s high end target product result in bringing in high-end consumer into its stores which is another reason it’s appealing. 2. What are the chief elements of Costco’s strategy? How good is the strategy...
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...Costco Case Analysis Assignment # 1 Mark Frenkel MGMT 670 9046 02/21/11 Jim Sinegal initially took a job at Fed -Mart as a means to pay his bills while attending San Diego Community College never imaging that this decision would forever change the direction of his life. It was there that he met Sol Price, who ran the company and who mentored his further inclusion in the business. Sol had a vision that he acted on when he founded his Price Club with the goal of establishing a member warehouse retailing niche business. Having embarked on this path, he took Jim with him and they shared a vision for shaping how they would do business going forward. Initially, Price was content in becoming a leader in member warehouse retailing until he correctly recognized an opportunity to gain more sales volume and greater negotiating leverage with suppliers by granting membership to individuals which arguably created the market for deep-discount warehouse clubs. Sinegal excelled at understanding the driving elements in this type of marketing and became particularly adept at understanding what was working and what wasn’t at stores, which was something that Price was also very good at. Noticing these burgeoning skills, Price made him the manager of the original store. It was here that Sinegal learned the craft at the hands of his mentor, a task he did so with such skill that he decided to leave the proverbial nest and team up with Seattle-based...
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...4/26/13 Industry: Variety Stores Sector: Retail Costco Wholesale Corp. Investment Thesis Key Statitisics 52 Week Price Range 50-Day Moving Average Estimated Beta Dividend Yield Market Capitalization (In Millions) 3-Year Revenue CAGR Trading Statistics Diluted Shares Outstanding (In Millions) Average Volume (3-Month) Institutional Ownership Insider Ownership EV/EBITDA (LTM) Margins and Ratios 60.00 81.98 109.75 104.26 0.68 $ 0.28 1.76% 47682 12% Costco is the second largest membership discount retailer in the U.S. Costco’s business segments comprised of Consumer Staples and Consumer Discretionary make its revenue more robust in a unstable economic environment Costco bolsters a significant portion of its income from membership dues, which it can increase a certain extent every year without significant loss in membership Five-Year Stock Chart 439.53 2.05 76.97% 120.00 45,000,000 40,000,000 100.00 1.01% 12.12 80.00 35,000,000 30,000,000 25,000,000 Gross Margin (LTM) EBITDA Margin (LTM) Net Margin (LTM) Debt to Enterprise Value 12.42% 3.82% 1.72% 20.00 40.00 20,000,000 15,000,000 10,000,000 3.11% 2008-05-02 2009-05-01 2010-04-30 2011-04-28 2012-04-26 0.00 2013-04-29 5,000,000 0 Adj Close 50-Day Ave 200-Day Avg Volume Forecast Summary UOIG Projections Net Sales ($M) EBITDA ($M) Basic EPS ($) Consensus Estimates Net Sales ($M) EBTIDA ($M) Basic EPS ($) 2012A $99,137.00 $3,667.00 $4.02 $99,137.00 $3,667...
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...Costco: Weakness of Three Aspects, a Company, Diversity, and Globalization INTRODUCTION The history of Costco “We are a membership warehouse club, dedicated to bringing our members the best possible prices on quality brand-name merchandise.” Costco Wholesale Corporation is one of biggest wholesale corporations in the United States and several other countries. The story of Costco’s rise from a single Seattle store in 1983 to a multinational chain of enormously profitable warehouses is a tale of perfect leadership in a rapidly-changing retail world. The company’s first location was in 1976 under the name Price Club which was established by Sol Price. Jim Sinegal launched a competing company with an idea of a wholesale business, Costco. The two businesses eventually merged in 1993, and Sinegal went on to educate Sol Price on the art of getting the right product in the right place for the right price. When Costco and Price Club merged in 1993, the operation under the name “PriceCostco” had 206 locations generating $16 billion in annual sales. Since resuming the Costco name in 1997, the company has grown to more than 500 locations worldwide. After opening the first Costco warehouse located in Seattle, WA, U.S.A. Costco became the first company ever to grow from zero to $3 billion in sales in less than six years. Costco’s strategy There are several factors for Costco to increase its growth under the strategy of the right products in the right place for the right price....
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...stoAnnual Report 2010 2010 year ended august 29, 2010 THE COMPANY Costco Wholesale Corporation and its subsidiaries (“Costco” or the “Company”) began operations in 1983 in Seattle, Washington. In October 1993, Costco merged with The Price Company, which had pioneered the membership warehouse concept, to form Price/Costco, Inc., a Delaware corporation. In January 1997, after the spin-off of most of its non-warehouse assets to Price Enterprises, Inc., the Company changed its name to Costco Companies, Inc. On August 30, 1999, the Company reincorporated from Delaware to Washington and changed its name to Costco Wholesale Corporation, which trades on the NASDAQ under the symbol “COST.” As of December 2010, the Company operated a chain of 582 warehouses in 40 states and Puerto Rico (425 locations), nine Canadian provinces (80 locations), the United Kingdom (22 locations), Korea (seven locations), Taiwan (six locations, through a 55%-owned subsidiary), Japan (nine locations) and Australia (one location), as well as 32 warehouses in Mexico through a 50%-owned joint venture. CONTENTS Financial Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Letter to Shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Map of Warehouse Locations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ...
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...consists of retail operations in 14 countries and Puerto Rico. During fiscal 2010, the segment generated 24.7% of the Company's net sales. The International segment includes different formats of retail stores and restaurants, including discount stores, supercenters and Sam's Clubs that operate outside the United States. • The Sam's Club segment consists of membership warehouse clubs in the United States and the segment's online retail operations, samsclub.com. During fiscal 2010, Sam's Club accounted for 11.5% of its net sales. Wal Mart v/s Competitors Market cap Wal Mart Stores Inc $196.1B Target Corp $39.5B \ Costco Wholesale Corp $27.8B Dollar General Corp $9.8B Ratio Analysis: Examining Wal-Mart's annual financial reports gives an optimistic position on Wal-Mart's financial wellbeing. After a systematic examination of the detailed ratios...
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...Company Overview In the first part of our analysis, we give a brief introduction about Target Corporation and its main competitors, Costco and Wal-Mart, so that we can set some decision rules to allocate the resources. Target Corporation Brand Strategy Target Corporation has a very strong brand, and their logo is recognized by more than 97% of the United States population. One of Target’s strength is that the corporation has more than 1,750 stores in the United States, and it has store in almost all the states of United States. Another of its strength is its ability to anticipate the demands of the customers and its ability to provide high-quality and innovative products which in return make their customers become loyal of availing all their services and products. Table 1 SWOT Analysis of Target Corp. Strengths Strong brand awareness and recognition Employee retention Design and innovation Opportunities Global expansion Focus on private label products Advised Future Strategy The threat faced by all these market players is the recession faced by the US economy, and since Target only operates in the United States, they don’t have the ability to fall back on their foreign markets. So Target must begin their career to the global markets. And It’s over emphasis upon the quality of products makes its products expensive than its competitor Wal-Mart. Therefore Target must devise effective strategies to ensure high quality at economic prices. Weakness Low global presence Quality obsession...
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...Submitted By: Kunal Bhatia (M00116, Hitesh Bambhaniya (M00126), Saloni Umraniya (M00128), Sagar Nathani (M00134) 3/6/2014 Table of Contents Introduction 3 Value Chain System of wall mart 4 Porter 5 force 4 SWOT 5 Competitors 6 Suppliers 8 Back haul of wall mart 9 Role of HR 10 Role of RFID 11 Strategy 12 Strategy of other companies 13 Conclution 16 Introduction The retail industry is dominated by few retail giants, with Wal-Mart competing in several retail categories. Wal-Mart competes against Kmart and Target in the general merchandise retailing; against Costco in the warehouse club segment; and against Kroger, Albertson’s and Safeway in the supermarket retailing. Competition among retailers centers on pricing, store location, variations in store format and merchandise mix, store size, shopping atmosphere, and image with shoppers. Further analysis provided by the following figure diagnoses the competitive environment of the retail industry. As a fact, Wal-Mart is considered as the world’s largest retailer nationwide that has been guided by its founder Sam Walton’s passion toward customer satisfaction, and his beliefs in excellence, as well as his philosophy in lowering his prices that has been proven with his famous slogan “everyday low prices.”1Visible outstanding success has required a lot of effort, strategies, dedication, and wide consideration. Such as Wal-Mart, victory is an echo that needs a lot of challenge to market real as Sam...
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...UVA-F-1563 Rev. Jan. 22, 2013 TARGET CORPORATION On November 14, 2006, Doug Scovanner, CFO of Target Corporation, was preparing for the November meeting of the Capital Expenditure Committee (CEC). Scovanner was one of five executive officers who were members of the CEC (Exhibit 1). On tap for the 8:00 a.m. meeting the next morning were 10 projects representing nearly $300 million in capital-expenditure requests. With the fiscal year’s end approaching in January, there was a need to determine which projects best fit Target’s future store growth and capital-expenditure plans, with the knowledge that those plans would be shared early in 2007, with both the board and investment community. In reviewing the 10 projects coming before the committee, it was clear to Scovanner that five of the projects, representing about $200 million in requested capital, would demand the greater part of the committee’s attention and discussion time during the meeting. The CEC was keenly aware that Target had been a strong performing company in part because of its successful investment decisions and continued growth. Moreover, Target management was committed to continuing the company’s growth strategy of opening approximately 100 new stores a year. Each investment decision would have long-term implications for Target: an underperforming store would be a drag on earnings and difficult to turn around without significant investments of time and money, whereas a top-performing store would add value both financially...
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...highest profit. So, increasingly companies are not merely asking themselves the management question of ‘Are we doing the right?’ but are having to regularly ask ‘Are we still doing it right?’ They have been seeking a more holistic means of doing this than traditional means of delivering products and services to the customers. In a volatile world, decision makers need options on the future and the ability to change direction as strategic opportunities. Although, business as usual (BAU) performance change is providing a short term success but they are typically faced with a less than perfect processes to make investments. In this case analysis, we are trying to summarise the current situation facing the firm by analysing the general environment, industry, competitor, swot analysis with the recommendation and conclusion. 2.0 External Environmental Analysis Wal-Mart is a household name in the retailing industry. It is one of the few companies that have managed to...
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