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4 Comments
I know that I am doing my part to contribute.
This is one ugly chart…. Sadly this is considered a miss by Costco,
I used to work for a company that sold food to Costco. They take, by far, the smallest markups in the industry and their buyers always claimed that they wanted to make most/all of their profit from membership fees rather than selling goods. Half of their gross profit actually did came from membership fees which is pretty amazing. Not quite what the claimed they wanted to do, but closer than you would think.
All the bitching about Sankeys then you see this 😂
I did a quick retail comparison with a coworker the other day on income statements of a few different retailers and it’s so interesting how different businesses operate.
GAP: High GP%, High Op Ex %, low NI%
WMT: Low GP%, Medium Op Ex %, Low NI%
CSCO: Very low GP%, Very Low Op Ex %, Low NI%
HD: Medium GP%, Medium Op Ex%, highest NI%
Obviously higher revenues help leverage costs so you can run tighter margins on products, and Costco uses membership fees to basically generate some profitability, but even so Costco is extremely efficient at operations. Low store count (compared to revenue, aka highest revenue per location), low sku count, mostly palletized products for lowering labor and SC costs, every employee is basically fully utilized all day either checking people out or restocking product.
Really is impressive how they operate, though HD is more impressive in terms of NI.