Risk, returns & timeframes illustration
1 min read
October 4, 2022
by
Regan Pearson

Happy Costco day! 🥳

Costco’s landed in Aotearoa and they say it’s just the start of their Down Under adventure. So what can Kiwis expect to find under this year’s Xmas tree? And will our spending splash the cash on Costco’s bottom line?
Risk, returns & timeframes illustration
1 min read
October 4, 2022
by
Regan Pearson

Happy Costco day! 🥳

Costco’s landed in Aotearoa and they say it’s just the start of their Down Under adventure. So what can Kiwis expect to find under this year’s Xmas tree? And will our spending splash the cash on Costco’s bottom line?
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Last week Kiwis officially welcomed low-price wholesaler Costco (COST) to the country. It’s one of 25 new locations Costco plans to open worldwide over the next year. And what better way for fans to celebrate than with $1.99 hotdogs, 1.9L buckets of mayonnaise and… fresh ink? 🤤

For many New Zealanders, Costco’s arrival couldn’t come soon enough. Covid has turned us into a nation of bargain hunters as our budgets get sucked dry by rising costs and our consumer confidence vibes tank. You may not get a new diamond ring under the Christmas tree this year, but if you find yourself unwrapping a new set of tires, or an oak casket, there’s a chance it came from Costco. ⚰️ Thanks to TikTok, Costco could also become the star of our hot summer fashion trends. According to NPR, the search term ‘Costco clothing finds’ has nearly 2 billion views on TikTok. #CostcoCouture 👗

Unlike big box retailers Walmart (WMT) and Target (TGT), to be a part of the Costco fun, Kiwis must first stump up $60 to become a member. Those membership fees are a key part of Costco’s business model and can add up faster than a trolley full of toilet paper. Last month Costco released their full year results for the year ended 28 August, 2022 and reported US$4.2 billion of revenue came from selling memberships alone. That’s just a drop in the giant mayonnaise bucket compared to the company’s total revenue of US$227 billion. But because Costco sells products so cheaply, those US$4.2 billion of membership fees were a meaningful driver of the company’s US$5.8 billion profit for the year. Good thing the company has vowed to keep their iconic $1.99 hotdogs at the same price ‘forever’ to make sure customers keep coming back. 🌭

Regan Pearson
Finance writer
Linkedin

We’re not financial advisors and Hatch news is for your information only. However dazzling our writing, none of it is a recommendation to invest in any of the companies or funds mentioned. If you want support before making any investment decisions, consider seeking financial advice from a licensed provider. We’ve done our best to ensure all information is current when we pushed ‘publish’ on this article. And of course, with investing, your money isn’t guaranteed to grow and there’s always a risk you might lose money.

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