Costco Wholesale Corporation

Costco Wholesale Corporation

Equity Research Project Paper

ACC645

Professor: Roberta Cable

Company Profile:

Costco Wholesale Corporation was founded in 1976 Issaquah, Washington. Costco operates membership-only warehouse club. The company mainly provides groceries, appliances, beverages, electronics, and etc. In September 15, 1983, Costco opened its first warehouse in Seattle, Washington. In 1993, Costco merged operation with Price Club and combined the name PriceCostco. The combined company took a great success that it opened over 200 warehouses and generated over $1.6 billion in annual year. In 1994, the founded of Price Club left the combined company and Costco changed its name to Costco Wholesale Corporation in 1997. In 2015, Costco becomes the second largest and the largest membership warehouse club in the United States. In addition, as of November 2015, Costco operated a total of 674 warehouses, including 474 in the United States, 89 in Canada, 26 in United Kingdom, 7 in Australia, 34 in Mexico, 10 in Taiwan, 12 In South Korea, 20 in Japan and 2 in Spain. The company not only sells its products in stores, but also provides online services. In October 2014, Costco announced taht it plans to open an online store in China using Alibaba Group. In December 5, 1985, Costco went public at $10 per share before stock split. Adjusting for stock splits, the initial price per share was around $1.67.

Costco is a member-only warehouse club, so it is only open to members except for some liquor and gasoline in states in the United States. The membership fee in the United States is $55 per year and American Express and Costco Credit Card are the only two credit cards that can be accepted because American Express charges a very low interchange fee for Costco, but this regulation will be eliminated in 2016. For the products, Costco offers high-quality products well below the industry norm and focuses on offering low prices with high volume. The products in Costco often sell as bulk-packages and are usually sold for families and business uses. The reason for low price and bulk-packages is that it can increase the volume of sales from vendors, so the vendors will provide further discounts and decrease the costs.

The company's competitive and the broader business environments:

SWOT Analysis

Strengths: The biggest strength for Costco is low-price with good quality products. Compared to other warehouses clubs, Costco focuses on low-price with high volume