Costco: A Giant on a Growth Path

In the past three years, Costco Wholesale's stock price has risen by nearly 80%, while the S&P 500 increased by only about 30%. Costco has proven resilient to economic headwinds and impressed investors with steady growth. At its core, Costco's success relies on the effective use of economies of scale, enabling it to offer products at significantly lower prices than competitors in brick-and-mortar retail. The business model of an exclusive warehouse club, whose main revenue comes from membership fees, allows for operating with low-profit margins. A key aspect of the company's strategy is opening new warehouses to reach more customers. Over the past three years, comparable sales have grown, new members have been acquired, and high renewal rates have been maintained. Last September, Costco increased membership fees for the first time in seven years to offset inflationary pressures and cover the logistics costs of the online business, as well as recent wage increases in the US and Canada. For the next three years, Costco plans to open 29 new locations, including 12 in the US, and expects to benefit more from increased membership fees. Experts forecast annual sales growth of about 7% and a 10% increase in earnings per share by 2027. Compared to competitor Walmart, which pursues a similar concept with Sam's Club but expects only a 5% sales growth and a 17% EPS increase, Costco remains a stable investment with potential.