Costco Plans New Stores in Next 5 Years

Published on November 12, 2009 | Comments: 0
Buoyed by a recent upturn in same-store sales, discount warehouse club retailer Costco Wholesale Corporation is planning significant new store openings during the next five fiscal years. According to Goozad, Costco expects to open 15-20 stores during its current fiscal year 2010, which ends in August 2010. In addition, Costco plans to open as many as 20 stores per year during its fiscal years 2011 and 2012, and up to 25 stores per year during its fiscal years 2013 and 2014. Most stores will open in the U.S., but Costco is also considering adding to existing stores operating in Japan, Taiwan, Korea and Australia. Costco discussed its expansion plans during its recent investor conference. Costco’s boost in confidence for the next five fiscal years comes after a difficult fiscal 2009. In July, Costco shuttered its two specialty Costco Home home furnishings stores, citing the current economic slowdown and weakness in the home furnishings business as prompting the closures. The retailer also settled a lawsuit alleging improper monitoring of the temperature of the fuel it sells in several states, and had a class action lawsuit filed by an employee at a California store alleging illegal denial of compensation and overtime benefits, as well as false imprisonment. Financially, Costco reported decreases in net income and comparable store sales during fiscal 2009. However, excluding negative impacts from gasoline deflation and foreign exchange, comparable store sales actually rose for the year in the U.S., internationally and across the enterprise. A number of retailers have recently announced plans to open new stores, which may signal an improvement in the ongoing economic recession. Chains including Wal-Mart, Walgreens, Best Buy, Meijer, Starbucks, Target, Kohls, Macy’s, Lowe’s, Wegmans, Uno Express, Dollar General, Dunkin’ Donuts, Baskin Robbins, Einstein Bros., U-Swirl, Corner Bakery Café, Arby’s and Smashburger have all announced or enacted plans to open new stores in the past six months. It is worth noting that all the mentioned chains in the food service vertical are either partially or entirely relying on franchising and/or licensing agreements to promote rapid store growth. Costco operated 406 U.S. stores and 153 international stores at the end of fiscal 2009.

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