Costco has posted a slideshow highlighting its 3rd quarter results for fiscal year 2007. Most of the graphics are picked up from its 2nd quarter slideshow that we talked about here.
What is interesting to us and accounts for why Costco is such a fierce competitor is this slide:
At a time when Wal-Mart has refocused on increasing gross margin, note how Costco relentlessly drives gross margin down. Note that selling, general and administrative expenses this quarter were 9.83% of sales. With gross margins at 10.36% of sales, they are running the warehouses to make just a tad over half a percentage point.
The big profit is the 2.18% of sales they take in from membership fees.
What an incredibly strong value proposition to offer to any Costco Club member. And that number is over 27 million households.
You can view the whole slide show here.