Pork floss, crab and chicken: Costco reveals top sellers. Video / NZ Herald
Total revenue from New Zealand’s first Costco Wholesale has risen by 1600 per cent from $20.5 million to $341m, as the American-headquartered retail giant beds down its operations in this country and eyes expansion.
But hang on a second, here.
Costco New Zealand opened its petrol operations inApril 2022 and its store in September 2022 so its first-year accounts were not for a full 53 weeks of trading. That might make the figures for the 53 weeks to September 3, 2023 look far better because it’s expressing activities for an entire year.
Costco NZ staff, with Australasian boss Patrick Noone (far right), celebrating breaking 150,000 members in a photo posted to Facebook in March this year. The firm would not confirm the number.
The global business which owns its first $100m-plus store on Auckland’s northwest fringes at Westgate has just released accounts for its latest year.
That shows how popular the three-level store is in terms of total revenue, despite some New Zealanders having reservations about its $60/year membership fee.
Full-year accounts were posted on the New Zealand Companies Office overnight.
It still recorded a bottom-line loss of $20.5m (previously $12.5m) due mainly to general and administrative costs which spiked at $38.4m (previously $13.3m).
But that’s not unexpected in an initial phase where the business is still getting established. Notes to the accounts show the company’s salary bill rose from $8.3m to $20.9m in the latest year, which is why those admin costs rose so much.
A cake boasting of 150,000 members in New Zealand was shared on social media and the Herald reported on that last March.
The store employs dozens of staff but unlike most retail operations, it has no warehouse. Instead, it delivers goods on pallets directly on to its shop floor, cutting out an expensive part of other retailers’ costs - storage and warehousing.
Patrick Noone has been replaced by Christopher Tingman as a director. Noone was previously Costco's Australasian chief and visited here often as the new store was developed and opened in September, 2022.
The accounts audited by KPMG in Sydney also showed inter-company dealings.
Some of the goods we’re buying at Westgate’s Costco are coming not from suppliers directly but from other Costcos in this region of the world.
The Auckland store is buying goods from Costco in the United States, Australia and Korea. The Westgate operation bought $60.9m worth of goods from Costco Australia, up on the previous year’s $38m.
It bought $12.1m of goods from the US, up on $2.1m and $780,000 of goods from Costco Korea, up on the $140,000 previously.
Patrick Noone has also been replaced as a director of Costco Wholesale New Zealand from December 1 last year.
Christopher Tingman took over from him. He’s the new Australasian boss.
Costco Wholesale New Zealand opened fuel operations in April, 2022. Photo / Dean Purcell
Accounts were signed on December 19, 2023 by Tingman and Pierre Riel, the executive vice-president and international division chief operating officer for the business, headquartered in Issaquah, Washington State in the United States’ west.
Total assets of Costco Wholesale New Zealand now stand at $232m (previously $201m). Current liabilities stand at $42m (previously $50.8m).
Global operations were summarised in Costco Wholesale’s full annual report for the year to September 3, 2023.
The first Costco warehouse opened in Seattle 40 years ago.
“We grew to nearly US$3b in sales in less than six years,” the report said, noting membership fee revenue up 8 per cent for $4.6b.
Globally, Costco now has 128m cardholders or members and a stunning 90 per cent renewal rate, showing customers are remaining loyal.
Global net sales for the 2023 financial year’s 53-week period totalled US$237.7b, up 7 per cent annually.
In the 2023 fiscal year, Costco’s expansion included opening 23 new stores: 13 in the US, three in China, one in Japan, one in Australia, one in South Korea, one in Sweden and “our first warehouse in New Zealand (Auckland)”.
But a map in that new annual report points to the business operating from the top of the South Island, rather than Auckland.
The report also cited inflationary pressures around the world.
“Although we experienced inflationary pressures and general economic uncertainties, our buying and operations staff ensured that quality and value remained priorities,” that report said.
“Our operating philosophy ... remains simple: provide our members quality merchandise and services at the lowest possible prices. We achieve this through our commitment to carrying out our mission statement and adhering to our code of ethics.”
In New Zealand, the next Costco is expected to be built at Rolleston in Canterbury but no official announcement has been made.
Anne Gibson has been the Herald’s property editor for 23 years, has won many awards, written books and covered property extensively here and overseas.
