4 ms·

Costco doesn’t really have “margins” - everything is more or less expected to cover its cost and MAYBE a bit more to offset loss leaders like the rotisserie chi

Costco doesn’t really have “margins” - everything is more or less expected to cover its cost and MAYBE a bit more to offset loss leaders like the rotisserie chickens. Costco makes all of its profit from memberships. If they have higher prices than Costplus, that’s not a good sign. They’re a top tier company for logistics and price controls. Sounds like Cuban’s just eating the difference

skyyler 4y ago
Do you have any source for your claim about Costco's policy? I'm seeing that they price items at a very consistent 15% markup in a forbes article.
- lotsofpulp 4y ago
  Costco’s 10-Ks show their profit is almost always equal to about their revenue from membership fees. Which means everything else averages out to being sold at cost. https://www.investopedia.com/articles/investing/071015/3-reasons-costco-has-membership-fees.asp https://www.investopedia.com/articles/investing/071015/3-rea... Of course, this does not mean Costco’s pharmacy sales cannot have huge markups, or maybe Costco is paying its employees and suppliers too much, but based on their reputation and my experience over 20 years, I just trust they have the right price to quality ratios for me. I know I am not getting bottom dollar pricing, but they likely are not gouging and I also know they are a good employer, and thus I believe I will be getting a better product from its pharmacy as well. With CostPlus, they do not even employ the pharmacists, they outsource to a company called TruePill. How do I know what working conditions they have? Usually when a company starts outsourcing core functions, that means they are cheaping out. And not something I want for my medicine.
  - skyyler 4y ago
    If you actually look at their 10-K instead of letting other people tell you what's in it: 2020 Net sales ........................................ $ 163,220 Less merchandise costs ............................. 144,939 Gross margin ..................................... $ 18,281 Gross margin percentage ............................ 11.20 % Meanwhile: Membership fees .................................. $ 3,541 https://investor.costco.com/static-files/7ef7bed6-c48f-4687-9c82-eb104b4823a5 https://investor.costco.com/static-files/7ef7bed6-c48f-4687-...
    - lotsofpulp 4y ago
      Page 20 shows net income (profit) was $4.002B, which is not far from $3.541B revenue from membership fees. I expect profit to be a little bit higher for 2020 to 2022 years due to volatility in consumer goods prices due to all the stuff going on. https://www.macrotrends.net/stocks/charts/COST/costco/net-income https://www.macrotrends.net/stocks/charts/COST/costco/net-in... But as you can see, these are increases measured in the tenths of a percentage in profit margin, which would not indicate that Costco leadership is trying to fleece customers any more than they have been in the past. https://www.macrotrends.net/stocks/charts/COST/costco/net-profit-margin https://www.macrotrends.net/stocks/charts/COST/costco/net-pr...

skyyler 4y ago

Do you have any source for your claim about Costco's policy? I'm seeing that they price items at a very consistent 15% markup in a forbes article.

lotsofpulp 4y ago
Costco’s 10-Ks show their profit is almost always equal to about their revenue from membership fees. Which means everything else averages out to being sold at cost. https://www.investopedia.com/articles/investing/071015/3-reasons-costco-has-membership-fees.asp https://www.investopedia.com/articles/investing/071015/3-rea... Of course, this does not mean Costco’s pharmacy sales cannot have huge markups, or maybe Costco is paying its employees and suppliers too much, but based on their reputation and my experience over 20 years, I just trust they have the right price to quality ratios for me. I know I am not getting bottom dollar pricing, but they likely are not gouging and I also know they are a good employer, and thus I believe I will be getting a better product from its pharmacy as well. With CostPlus, they do not even employ the pharmacists, they outsource to a company called TruePill. How do I know what working conditions they have? Usually when a company starts outsourcing core functions, that means they are cheaping out. And not something I want for my medicine.
- skyyler 4y ago
  If you actually look at their 10-K instead of letting other people tell you what's in it: 2020 Net sales ........................................ $ 163,220 Less merchandise costs ............................. 144,939 Gross margin ..................................... $ 18,281 Gross margin percentage ............................ 11.20 % Meanwhile: Membership fees .................................. $ 3,541 https://investor.costco.com/static-files/7ef7bed6-c48f-4687-9c82-eb104b4823a5 https://investor.costco.com/static-files/7ef7bed6-c48f-4687-...
  - lotsofpulp 4y ago
    Page 20 shows net income (profit) was $4.002B, which is not far from $3.541B revenue from membership fees. I expect profit to be a little bit higher for 2020 to 2022 years due to volatility in consumer goods prices due to all the stuff going on. https://www.macrotrends.net/stocks/charts/COST/costco/net-income https://www.macrotrends.net/stocks/charts/COST/costco/net-in... But as you can see, these are increases measured in the tenths of a percentage in profit margin, which would not indicate that Costco leadership is trying to fleece customers any more than they have been in the past. https://www.macrotrends.net/stocks/charts/COST/costco/net-profit-margin https://www.macrotrends.net/stocks/charts/COST/costco/net-pr...