Business Analysis of Costco

 Analyze Historical Performance, Strategic Priorities, And Business Improvement Opportunities of Costco

Business Overview

Costco Wholesale Corporation, together with its subsidiaries, operates membership warehouses. It offers branded and private-label products in a range of merchandise categories. The company provides dry and packaged foods, and groceries; snack foods, candies, alcoholic and nonalcoholic beverages, and cleaning supplies; appliances, electronics, health and beauty aids, hardware, and garden and patio; meat, bakery, deli, and produces; and apparel and small appliances. It also operates gas stations, pharmacies, optical dispensing centers, food courts, and hearing-aid centers; and engages in the travel businesses. In addition, the company provides gold star individual and business membership services. As of August 28, 2016, it operated 715 warehouses, including 501 warehouses in the United States, Washington, District of Columbia, and Puerto Rico; 91 in Canada; 36 in Mexico; 28 in the United Kingdom; 25 in Japan; 12 in Korea; 12 in Taiwan; 8 in Australia; and 2 in Spain. Further, the company sells its products through online. The company was formerly known as Costco Companies, Inc. Costco Wholesale Corporation was founded in 1976 and is based in Issaquah, Washington.

Costco

Costco


R&P Rank: 16
Sector: Retail
Industry:Broadline Retail
H.Q Location:Washington
Website: www.costco.com
Company Address:
999 LAKE DRIVE, ISSAQUAH WA 98027-
Ph:425-313-8100

Business Analysis of Costco

The Retail Sector is witnessing a major shakeup, new age business models in the industry are transforming both customers and businesses. Faced with this uncertainity, companies are investing resources to transform their business. An in-depth business analysis is a valuable resource to identify and articulate the need for a business model change. At R&P Research we believe, the starting point for a business analysis is Benchmarking. Business benchmarking can be done at various levels: 1) Industry Benchmarking 2) Peer Benchmarking 3) Disruptors Benchmarking. In this report, we share the snapshot of how Costco compares against the industry on the major performance indicators. This analysis, along with peer group/disruptors benchmarking and revenue model understanding can help identify growth and cost optimization opportunities to maximize the value delivered by Costco to its stakeholders. R&P Research Industry Intelligence Platform provides historical data for last 15 years with an easy to use benchmarking interface for an in-depth comparative business analysis.

Here is the performance snapshot of Costco with an interactive chart.

  1. Revenue Growth: Costco reported a revenue growth of 2.2% year-on-year during 2016. Broadline Retail Industry grew at 0.3% in the same period
  2. COGS share of Revenues: As a percentage of revenue, Costco spent 86.7% of its total revenues on COGS. Broadline Retail industry average (COGS share of revenue) in the same period was 74.8%
  3. R&D share of Revenues: Costco R&D share of Revenues details are not available because either company does not share the data or we do not have it
  4. SG&A share of Revenues: As a percentage of revenue, Costco spent 10.2% of its total revenues on Sales, Marketing, and General Administration (SG&A). Broadline Retail industry average SG&A spending in the same period was 19.8%
  5. Inventory share of Revenues: As a percentage of revenue, Costco spent 7.6% of its total revenues on Inventories. Broadline Retail industry average Inventory spending in the same period was 11.0%
  6. Accounts Payable share of Revenues: As a percentage of revenue, Costco invested 6.4% of its total revenues on Accounts Payable (A/P) Broadline Retail industry average Accounts Payable investment in the same period was 8.5%
  7. Accounts Receivable share of Revenues: As a percentage of revenue, Costco invested 1.1% of its total revenues on Accounts Receivable (A/R). Broadline Retail industry average Accounts Receivable investment in the same period was 1.3%
  8. PP&E share of Revenues: As a percentage of revenue, Costco invested 14.4% of its total revenues on Property, Plants, and Equipments (PP&E). Broadline Retail industry average PPE investment in the same period was 23.2%
  9. Intangibles share of Revenues: Costco Intangibles share of Revenues details are not available because either company does not share the data or we do not have it
  10. Net Margins: Costco Net Margins in the year 2016 were 2.0%. Broadline Retail industry average Net Margins in the same period were 2.7%

Sector and Industry Association of Costco

For the purpose of performance benchmarking of a company with a sector or industry average, R&P Research associates every company with one sector and one industry. An industry consists of companies with related/similar business models. A sector comprises of a group of related/similar industries.

Costco is associated with Retail Sector and Broadline Retail Industry.

Retail sector is comprised of the following industries: Broadline Retail; Grocery Retail; Specialty Retail; Apparel Retail; Home Improvement Retail; Specialized Consumer Services. The definitions for each of the industries is as follows:

  • Broadline Retail industry includes retail outlets and wholesalers offering a wide variety of products including both hard goods and soft goods.
  • Grocery Retail industry includes retail stores that primarily offer non-perishable food that is packaged in cans, bottles and boxes, with some also having fresh produce, butchers, delis, and bakeries
  • Specialty Retail industry includes retailers and wholesalers concentrating on a Single Class of Goods, such as electronics, books, automotive parts or closeouts. It also includes automobile dealerships, video rental stores, dollar stores, duty-free shops and automotive fuel stations not owned by oil companies.
  • Apparel Retail industry consists of retailers and wholesalers specializing mainly in Clothing, Shoes, Jewelry, Sunglasses and Other accessories.
  • Home Improvement Retail industry includes retailers and wholesalers concentrating on the sale of home improvement products, including Garden Equipment, Carpets, Wallpaper, Paint, Home Furniture, Blinds and Curtains, and Building materials.
  • Specialized Consumer Services industry includes providers of consumer services such as Auction Houses, Day-care Centers, Dry Cleaners, Schools, Consumer Rental Companies, Veterinary Clinics, Hair Salons and providers of Funeral, Lawn-maintenance, Consumer-storage, Heating and Cooling installation and Plumbing services.

Industry Ranking of Costco

With $118.7 billion revenues, Costco ranked number 2 of all the companies in the US Broadline Retail industry. There were a total of 21 public companies in the US Broadline Retail industry that had revenues greater than $50 million during 2016.

The top-10 companies in the US Broadline Retail industry by revenues during 2016 were:

  1. Walmart ($482.1 billion)
  2. Costco ($118.7 billion)
  3. Target ($73.8 billion)
  4. Macy's ($27.1 billion)
  5. Sears Holdings ($25.1 billion)
  6. Dollar General ($20.4 billion)
  7. Kohl's ($19.2 billion)
  8. Dollar Tree ($15.5 billion)
  9. J. C. Penney ($12.6 billion)
  10. Dillard's ($6.8 billion)

Business Model Analysis (BMA) Framework

We use the following framework to assess the business model of a company. Business Model Analysis framework can be used by organizations to articulate growth strategies and identify cost optimization opportunities. Technology and consulting companies can use this framework to identify the value drivers and pain points of their targeted customers. Entrepreneurs can use this framework to understand the language of business and identify promising business opportunities. This framework can be used by any professional aspiring to take up a leadership role to better understand the businesses challenges, articulate growth strategy, and monitor the business improvement requirements for the organization.

Next Steps

  • Conduct a holistic benchmarking; to identify and target additional sources of value
  • Get in touch with us to learn more about Business Model Analysis Framework
  • Get free data, charts, and analysis of Costcoand its peers on select key performance indicators by clicking the reports provided below

Industry Peers and Competitors of costco

Walmart (WMT) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

Wal-Mart Stores Inc with $482 billion revenues in the year 2016 was the number 1 Broadline Retail company. Read this report to know the top competitors of Walmart and identify growth and cost optimization opportunities of Walmart

Target (TGT) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

Target Corp with $74 billion revenues in the year 2016 was the number 3 Broadline Retail company. Read this report to know the top competitors of Target and identify growth and cost optimization opportunities of Target

Macy’s (M) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

Macy's, Inc. with $27 billion revenues in the year 2016 was the number 4 Broadline Retail company. Read this report to know the top competitors of Macy's and identify growth and cost optimization opportunities of Macy's

Sears Holdings (SHLD) Business Analysis – Analyze Historical Performance, Strategic Priorities,...

Sears Holdings Corp with $25 billion revenues in the year 2016 was the number 5 Broadline Retail company. Read this report to know the top competitors of Sears Holdings and identify growth and cost optimization opportunities of Sears Holdings

Dollar General (DG) Business Analysis – Analyze Historical Performance, Strategic Priorities,...

Dollar General Corp with $20 billion revenues in the year 2016 was the number 6 Broadline Retail company. Read this report to know the top competitors of Dollar General and identify growth and cost optimization opportunities of Dollar General

Kohl’s (KSS) Business Analysis – Analyze Historical Performance, Strategic Priorities, And...

Kohl's Corp with $19 billion revenues in the year 2016 was the number 7 Broadline Retail company. Read this report to know the top competitors of Kohl's and identify growth and cost optimization opportunities of Kohl's

Revenues Analysis

Costco (COST) Revenues And Revenue Growth From 2012 To 2016

This report provides the last five years revenues and revenue growth of Costco Wholesale Corp (COST) from 2012 to 2016. Costco generated a total of $118.7 billion revenues during 2016. Costco reported a revenue growth of 2.2% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in September.

Costco (COST) Revenues And Revenue Growth From 2002 To 2016

This report provides the last fifteen years revenues and revenue growth of Costco Wholesale Corp (COST) from 2002 to 2016. Costco generated a total of $118.7 billion revenues during 2016. Costco reported a revenue growth of 2.2% year-over-year during 2016. The revenues and the revenue growth correspond to the fiscal year ending in September.

Costco (COST) Revenue Growth Comparison With Industry Growth From 2012 To...

This report provides a comparison of Costco Wholesale Corp (COST) revenue growth with Broadline Retail industry growth during the last five years from 2012 to 2016. Costco reported a revenue growth of 2.2% year-over-year during 2016. The Broadline Retail industry growth was 0.3% year-over-year during 2016. Costco growth was faster than the industry during 2016.

Profit Analysis

Costco (COST) Net Profit And Net Margin From 2012 To 2016

This report provides the last five years net profit and net margin of Costco Wholesale Corp (COST) from 2012 to 2016. Costco reported a total net income of $2.4 billion during 2016. Costco generated a total of $118.7 billion revenues during 2016. Costco net profit margin was 2% during 2016. The net profit and the net profit margin correspond