Filed under: Consumer experience, Costco Wholesale (COST), Mexico, Stocks to Buy
In today’s market, the retail space is fraught with risk. High energy prices have crimped consumers’ disposable income, and the housing slump has dented household formation — a backbone of retail sales growth. Meanwhile, sluggish job growth is sending a signal that a U.S. economic slowdown is underway.
Hence, if one is to consider a retail play, it should be a well-capitalized company, with a demonstrated business model, and Costco (NASDAQ: COST) fits that bill.
Costco helped define the ‘get it for wholesale’ space and now operates 520 warehouses, primarily in the United States and Canada. (The company operates 30 stores in Mexico via a joint venture.)
Costco’s philosophy differs from its competitors in that it focuses on a limited selection of national-brand merchandise and some private-label products. That laser focus, combined with buying direct from manufacturers and the company’s bare-bones warehouses, enables the company to operate profitably despite smaller gross margins. The Reuters F2008/F2009 EPS consensus estimates for COST are are $2.98/$3.39.
Continue reading For Costco, simplicity leads to profitability
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