Costco appeared poised to end 2004 on a positive note. Its focus on business members, ability to team company profitability with customer value, commitment to continued expansion in the U.S. as well as overseas, and strategy of driving comparable store sales gains using a treasure hunt strategy and ancillary businesses seemed to be paying off. However, some of the underpinnings of its success threatened to limit its rewards. Management worked to balance P&L investments in the business, especially its employees, with its goal of achieving better expense leverage to create shareholder wealth. It also wondered how to allocate capital, particularly between domestic and international store growth.
Case ID: 090506