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Costco: Companies
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Costco is a large corporation that is frequently upheld as an example of moral and caring management. With some of the highest rates of pay to the lowest end employees, excellent benefits and a strong willingness to work with unions, employees are held in high regard. Promotions occur within the company, and ... lower turnover. Although Costco spends much more per employee, the loyalty garnered results in much higher efficiency and thus lower overhead. In addition, with an average employee pay rate of $17 per hour, most employees working full time, and with the CEO paying himself far under what many CEOs earn, Costco has one of the lowest differences between average salary and CEO salary. Some investors complain that the company is too good to employees, saying that Wal-Mart like profit margins could be achieved if they dropped employee benefits to Wal-Mart's levels (although Costco employees sell 50% more per square foot of store and have a 25% higher profit rate than the more comparable Wal-Mart owned Sam's Club).
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[T]hen, Costco's new Kirkland outlet isn't your average big-box retail store. It's even unique for Costco. Of the company's more than 400 warehouses worldwide, the 103,000-square-foot Costco Home is its only location devoted to a single category of merchandise.
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Bottom line: Costco pulled in $13,647 in U.S. operating profit per hourly employee last year, vs. $11,039 at Sam's. Over the past five years, Costco's operating income grew at an average of 10.1% annually, slightly besting Sam's 9.8%. Most of Wall Street doesn't see the broader picture, though, and only focuses on the up-front savings Costco would gain if it paid workers less. But a few analysts concede that Costco suffers from the Street's bias toward the low-wage model. "Costco deserves a little more credit than it has been getting lately, [since] it's one of the most productive companies in the industry," says Citigroup/Smith Barney retail analyst Deborah Weinswig. Wal-Mart spokeswoman Mona Williams says that Sam's pays competitively with Costco when all factors are considered, such as promotion opportunities.
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While different company units hold small internal fundraisers throughout the year, Costco holds its big CMN campaign in the “Miracle Month” of May each year, when employees work hard to outdo each other with fun and creative fund-raising events. Many of the regional offices hold CMN golf tournaments, giving executives and the invited guests an opportunity to contribute. But the heart of Costco’s campaign has always been the sale of golf shirts and Miracle Balloons. By the end of the month, each warehouse is dripping with thousands of paper balloons, purchased by generous customers and employees.
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When a Costco employee who belongs to the Church of Body Modification insisted that her religious beliefs trumped the company dress code, a legal battle ensued. This in-depth report examines what happens when an employee’s religious beliefs conflict with the company dress code.
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Still, some analysts have raised concerns about the company's ability to post larger profits, complaining that Costco treats its employees and cardholders better than it does investors. Costco makes about 1.7 cents for every dollar in sales. Rival Wal-Mart Stores Inc., the operator of warehouse chain Sam's Club, makes about 3.3 cents for every dollar in sales.
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