US discount retailer Costco has funnelled another $110 million to its Australian operations to help fund its rollout of big-box warehouse stores as the world’s eighth-largest retailer intensifies the competitive battle with Woolworths and Coles.
The extra dollop of funding from its US parent has already helped Costco construct and open its fourth and fifth warehouse stores in Australia this year, giving it two locations in Melbourne and Sydney. The discounter is already building its sixth store, in Brisbane, and another is to follow in Adelaide soon.
It is believed that Costco is also scouting possible locations for its third store in Melbourne. It opened its maiden Australian Costco warehouse in Docklands in 2009 and a store in Ringwood last month.
Australia has delivered strong returns for the US-based Costco, with fresh documents lodged with the Australian Securities and Investments Commission showing Costco Wholesale Australia raked in $612 million in revenue from shoppers in 2012-13.
Want to publish your own articles on DistilINFO Publications?
Send us an email, we will get in touch with you.
These are hundreds of millions of dollars in sales that otherwise would have gone to supermarket industry leaders Woolworths and Coles, or to a range of bargain retail banner groups such as Target, Kmart, Big W and The Reject Shop.
The ASIC documents also reveal that Costco, which has been in Australia for five years, has now strung together its second consecutive profit, ringing up a full-year net profit of $1.81 million in fiscal 2013, down from a profit of $9.73 million in 2012. An income tax benefit of $13.4 million helped boost its 2012 bottom-line result.
Costco Australia made a loss of $13.2 million in 2011.
As its revenue races towards $1 billion it is unclear what proportion of Costco Australia’s sales for the 52 weeks to September 1, 2013, was sourced from purchases at its warehouse format stores and how much was derived from selling membership to Costco shoppers.
Costco charges $60 for membership, which allows shoppers to walk the aisles of its huge warehouses, which sell everything from birthday cakes, hearing aids and wine to diamond rings, jeans and American chocolate. Some US analysts have joked in the past that Costco’s actual business is selling membership, with its supermarket merely the side business.