US DISCOUNT retailing giant Costco has pinpointed the Asia-Pacific region as a key source of growth and has the capacity to roll out two stores a year in Australia, intensifying the battle with local market heavyweights Woolworths and Coles.
Costco, which relies on a membership model, has already signed 75,000 members in Australia, and is on track soon to hit 100,000 patrons across the country, despite only operating out of one store in Melbourne's docklands precinct. A second outlet in Sydney is in the planning approval process.
Costco chief financial officer Richard Galanti told analysts in the US during a quarterly earnings update that the supermarket company had locked on to this part of the world to feed its international growth aspirations. ''We are ramping up some of our international [operations] a little bit; our success in Asia is an example, and Australia.''
Costco has long sought a greater presence in Australia, and as part of a fresh aggressive push into the local market could announce its third store in Brisbane or Canberra soon. Mr Galanti communicated that rollout strategy to US analysts. ''It means instead of doing three in three years total, we will do hopefully five or six [in Australia].''
Costco has made a similar thrust into Asia, opening 22 stores across Japan, Korea and Taiwan.
Its international stores, which take in Canada, Mexico, Asia, Britain and Australia, have generated better growth rates than its American operations recently..
For the six months to February 14, 2010, international sales lifted 19 per cent against only a 3 per cent gain within the US. Across the group, Costco reported an 8 per cent increase in sales to $US35.28 billion for the first half of 2010, from $US32.52 billion during the first half of fiscal 2009. Costco has injected more than $100 million into its Australian business since 2008, with Costco Wholesale Australia recording a $2.36 million loss for the year to August 31, 2008, against a $1.43 million loss in 2007. As at August 31, 2009 the company had $1.4 billion equity.
The local managing director, Patrick Noone, said his target was to seek a new location every year, depending on the availability of land and on local planning regulations.
''We certainly have the capacity to do that [open two stores a year over three years]… I hope we can do that,'' he said.
''In Australia we have had a terrific opening in Melbourne, great support from the population.''
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