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Costco Wholesale Corporation: Financial Analysis - Research Paper Example

Undergraduate
Author : langoshjordy
Research Paper
Finance & Accounting
Pages 13 (3263 words)
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Summary

Being a major player in the wholesale retailer industry, Costco has devised its own unique approach to create its own niche in the market and face the industry's challenges. The following SWOT analysis illustrates certain aspects of those challenges faced by Costco and the strategy it hopes will improve upon its current market share…

Extract of sample
Costco Wholesale Corporation: Financial Analysis

Costco Wholesale Corporation is the fifth largest retailer and the largest membership warehouse in the United States (2011 Top 250 Global Retailers, 2011), having presence in Japan, Mexico Australia, Korea and the United Kingdom. Founded in 1983, Costco has, as of 2011, gone on to establish 582 warehouses worldwide, 492 of which are located in the United States (Audited Financial Statement 2011, 22). The business model of Costco is centered around memberships which allows customers access to the product catalogue of the company at significant discounts. As such, the company is following the low price high turnover approach, under which Costco has registered a sales revenue of $88.9 billion and a net profit bottom line of $1.46 billion in 2011 (Audited Financial Statement 2011, 47). The financial figures included in the financial analysis are taken from the audited financial statements of Costco Wholesale Corporation 2010-2011 and figures used in calculations are in $ million.

The business model of using a membership to allow customers to avail significant discounts has helped Costco to maintain a loyal client base. The retailer is famous for offering unparalleled discounts and promotes a “treasure hunt” shopping environment. This strategy involves offering large discounts on certain items which will be available for a short period of time, and as such increases turnover by volume. ...
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