Costco’s Business

My first item relates to description of Costco’s business appearing on page 4.

Costco and its subsidiaries started to run in 1983 in Seattle; nowadays it operates not only in the U.S, but also in Puerto Rico, Canada, U.K., Mexico, Spain Taiwan and Korea.

The concept of the business is offering Costco members the wide range of quality products at lower prices that cannot be found elsewhere. Company carries about 3,700 stock keeping units per warehouse facility, which is significantly lower compare to other retailer’s SKUs quantity. It is because most of the products are provided for sale in fast-selling sizes like cartons, cases and multiple-pack quantities to produce high-volume sales at the fast inventory turnover.

The operation of the company is based on the efficient distribution network and decreased merchandise handling in basic, self-service warehouses; that makes the company to run profitably at remarkably lower gross margin than Costco’s competitors such as supermarkets, supercenters, traditional wholesalers, and mass merchandisers.

My second item relates to risk factors of Costco appearing on page 8.

My third item relates to properties of Costco appearing on page 14.

At August 31, 2014 the total number of membership warehouses Costco operated was 663; 468 of them were operated in United States and Puerto Rico. For the past five fiscal years the warehouse openings has been increasing every year. In the U.S. at the end of 2014, the operating floor space of warehouses was 95.3 million square feet, in Canada - 12.1million, and in other international locations - 15.1 million. In addition, there are 23 depots, which are near 9.4 million square feet, and they are operated for distribution and consolidation of the merchandise to warehouses and other facilities to support the