Why Wal-Mart Will Never Pay Like Costco

Re:Why Wal-Mart Will Never Pay Like Costco by tanzam75 on Thursday August 29, 2013 @01:46AM (#6294458)

> Did you notice the data point in the article that Costco makes $2 billion in membership revenue and yet makes $1.7 billion in profit, which means they effectively lose money on their sales?

That $1.7 billion is net income, which is after subtracting out the income tax. You have to compare to pre-tax income, which in the case of Costco is essentially just operating income.

75% of Costco's income came from membership fees in the last fiscal year, and similar or higher percentages in other recent years.

From Costco's FY 2012 annual report, page 25 (in millions of dollars):

         Membership   Operating income
  2008      1,506          1,969
  2009      1,533          1,777
  2010      1,691          2,077
  2011      1,867          2,439
  2012      2,075          2,759

PDF file: http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9M...

The membership fee, of course, serves another purpose. It reduces patronage by lower-income shoppers, and therefore helps to reduce shoplifting. The receipt-check is another deterrent. Since Costco has such a tight margin on its merchandise, it cannot tolerate industrywide shrinkage rates.

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Re:Why Wal-Mart Will Never Pay Like Costco by rogerbinns on Thursday August 29, 2013 @05:57AM (#6295059)

The receipt check is generally there to catch crooked cashiers not crooked customers. Without it a cashier could fake scan items and their accomplices walk out undetected. The check means at least two employees have to collaborate to steal.

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