Costco posted a little slide show about its status today. You see why they are such tough competitors.
With a gross margin in the first quarter of 2006 of 10.58%, they had selling, general and administrative expenses of 9.98% — or in other words, they work all year long and basically operate the stores for nothing. Almost the entire profit of the company came from the 2.07% they received from membership fees and miscellaneous revenue.
They also have an eye for using their private label in places where it can really create value for consumers. The slide show mentions a 31% savings on Kirkland Signature’s sports drink as opposed to Gatorade.
The slide show has some nice pictures of Costco perishables but also indicates an interest in longer lasting items.
Did you know Costco sold over 100,000 carats worth of diamonds in Fiscal Year 2006?