LYCOS RETRIEVER 
Costco: Pricecostco
built 607 days ago
Food Costco's food section has a variety of foods and beverages that customers would find at a grocery store, but for lower prices. The food section includes bakery goods, meats, and frozen foods. Costco ... carries specialty foods and wines.
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In 1993, Costco merged with Price Club. Costco’s business model and size were similar to those of Price Club, which was founded by Sol and Robert Price in 1976 in San Diego, California.[5] Thus, the combined company, PriceCostco, was effectively double the size of each of its parents. Just after the merger, PriceCostco had 206 locations generating $16 billion in annual sales. PriceCostco was initially led by executives from both companies, but then Sol and his son Robert Price founded
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Costco warehouses carry bulk from food to books to household appliances. Customers like the wide selection and low prices. Costco employees enjoy high wages and health benefits. Costco deserves praise for refusing to follow Wal-Mart's example of pushing employee pay and benefits as low as possible. Costco workers receive an average hourly wage of $15.97 an hour, and 82 percent are covered by a company health plan, resulting in a turnover rate of just six percent per year. However, the company's high employee relations standards do not herald corporate responsibility.
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Costco is so good to consumers that shareholders suffer, because Costco refuses to raise prices even when demand indicates it can, says Deutsche Bank's Dreher. "I am loyal as a consumer, but I am anything but a loyal investor," he says.
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Costco focuses on selling products at low prices, often at very high volume. These goods are usually bulk-packaged and marketed primarily to large families and businesses. Furthermore, Costco does not carry multiple brands or varieties where the item is essentially the same except when it has a house brand to sell, typically under the Kirkland label. This results in high volume of sales from single vendor, allowing further reduction in price, and reducing marketing costs. Costco ... saves money by not stocking extra bags or packing materials; to carry out their goods, customers must bring their own bags or use the merchandise shipping boxes from the company's outside vendors.
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If shareholders mind Mr. Sinegal's philosophy, it is not obvious: Costco's stock price has risen more than 10 percent in the last 12 months, while Wal-Mart's has slipped 5 percent. Costco shares sell for almost 23 times expected earnings; at Wal-Mart the multiple is about 19. Mr. Dreher said Costco's share price was so high because so many people love the company. "It's a cult stock," he said.
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