Costco Will Spend $4 Billion In 2022

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Costco has remained on a roll, and like its select, best-in-class competitors, has well met the demands of the pandemic. The company ended FY 2021 61.7 million paid household subscriptions, which represents an increase of 13% from the same period in 2019.

Based on strong 2022 fiscal second quarter results, their tailwind remains in line with double-digit net comp store sales growth in December. as well as the for an 18-week period until January 2, Costco’s net sales of $76.3 billion were up 16% from $65.5 billion in the year-ago period. Membership retention has remained around 90% over the years, and the most recent combined reporting for the US and Canada was 91.6%.

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While this number may seem staggering to the uneducated, any family that runs Costco regularly knows the endorphin rush that comes with that experience. Their secret sauce that founder Jim Sinegal describes as “triggers and treasures” is the 75/25 blend I described. my book, which keeps us coming back for more. And it appears he has more in his 2022 plans.

Major Capital Expenditure Planned

wall street journal Reported Worldwide capital spending for large companies this week is expected to grow 6.1% in 2022, well above 2021 levels. And Costco specifically expects to spend about $4 billion during its fiscal year 2022, which ends in August. This represents a 10% increase in expenses for 2021 and a 42% increase compared to 2020. In the same WSJ article, Costco’s senior VP of finance and investor relations, Bob Nelson, stated that “Costco—which is cash-rich and carries minimal debt—opened 20 net new stores globally in 2021, and is expected to grow to 28 this year.

Costco operates 828 stores globally, most of which are in the US, but also include locations in Canada, Mexico, Japan, and the UK. I reached out to indicate Costco’s locations and opening times, but not informed. It was said that such information is made public only 2-3 months before the inauguration.

Their website reveals three December 2021 openings (Bilbao, Spain; Suzhou, China; and Melbourne, Florida) and an estimated February 2022 store opening scheduled for Kelowna, British Columbia. that special 167,177 Square Foot Costco Warehouse, actually replaces an existing store built in 1991. Costco usually has limits 80,000 to 230,000 square feet With an average of 146,000 square feet.

Growing Customers and Raising Fees

Costco’s lifeblood has long been their membership, according to statistics It was an astonishing $3.54 billion in 2020, compared to $1.7 billion for Sam’s Club during fiscal year 2021. An additional 800,000 Costco members were added in the first quarter of 2022, as of December 9, 2021.

According to Guggenheim Analyst John Heinbockel The height of the fee could be eight to nine months away, probably in September 2022 and will likely be between $5 and $10. Viewers believe that the move is long overdue, as the last hike was in June 2017, and the previous one was in May 2006. Historically, fee increases have been preceded by a rising stock price, and certainly this is the case with Costco. 50.7% stock price increase in 2021.

Amped-Up Membership Perks

But while never settling for the best status quo, Costco is in the process of creating even more profits for its Kirkland-crazed customers. In addition to their great value, ever-changing product mix, and addictive tours, they’re also boasting membership perks. In 2017 the company introduced costco next, which offered additional savings on select brands that Costco supplies.

In late 2021 they expanded their offering through a marketplace such as costconext.com. Members visit the site, choose a supplier, verify their membership, and are offered further savings “A wide range of options, including high-end brands, exclusive and unique items, and popular products, which are often in limited supply.”

And, like many markets, Costco has no Costco Next inventory, but products are essentially sold and shipped directly from the manufacturer or supplier. and as suggested, the program is “Designed to complement both our inventory and quality standards.” Ka-ching!

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