Costco Maintains Store Growth Plans

ISSAQUAH, WA-Costco Wholesale Corp. will maintain the pace of its expansion of both its traditional warehouses and newer Business Center formats, executive VP Richard Galanti said at the company’s third quarter conference call.

Plans call for approximately 23 new warehouse openings in 2010, keeping expansion at about the same percentage rate as previous years. The 20 new openings this year include the company’s debut in Australia, with a unit opening in Melbourne in August. (Other openings for the fourth quarter include units in Japan, Korea and Taiwan.)

“We are seeing some opportunities out there, some at lower costs,” Galanti said.

The company also is opening two to three new Business Centers annually.

“They work, but we’re not going crazy [with expansion],” Galanti added.

Meanwhile, Costco continues to face comp-sales headwinds from declining gas prices and a strengthening dollar. Net sales for the quarter were $15.5 billion, down 5% from the same quarter in 2008. Comparable store sales declined 7% overall, with the United States posting a 5% drop and international units reporting a 12% comp decrease. However, if gas deflation is excluded, U.S. comps were flat, while international comps rose 8% in local currency. Net income was $209.6 million compared to earnings of $295.1 million in the prior-year quarter.

Costco operates 555 warehouses, including 407 in the United States and Puerto Rico, 77 in Canada, 21 in the United Kingdom, six in Korea, five in Taiwan, eight in Japan and 31 in Mexico.