Costco Australia revenues up 43.5%

Date : 07 January 2015

Accounts for Costco's business in Australia show that the retailer's revenue grew 43.5% for the year to 31 August 2014, with sales peaking at AU$878.5m.

New store, customer and volume growth

Revenues surged from the AU$612m posted the previous year as the retailer doubled its portfolio to six depots, with new openings in Ringwood, Melbourne and Crossroads, Sydney in November 2013, plus its first store in Queensland at North Lakes, Brisbane that opened in May 2014. Despite the revenue growth the cost of the expansion, plus changes in accounting procedures, meant that Costco registered a loss for the year of AU$8.6m, following a AU$1.8m profit registered the year before. However, despite some clear cannibalisation of existing store sales, customer numbers and volumes continue to grow.

Set to break the AU$1bn barrier in 2015

Costco has seen fantastic sales growth since entering the Australian market in 2009 and has led management to highlight the operation as a jewel in its international crown. Having opened its seventh depot and first in South Australia in Kilburn, Adelaide in November 2014, it also plans to open another three stores over the next few years, plus move deeper into the petrol market. With its continued expansion, sales will surely break the AU$1bn barrier in its 2015 FY, plus the more measured approach to new store growth and a maturing store network should see the retailer return to profitable growth.

Pressure on the establishment

Although Costco might yet have reached a scale that is impacting on the top line sales at Woolworths and Coles, the growth that it is generating, plus its geographical expansion, will certainly be capturing the attention of both its more established competitors and suppliers. The combined growth of both Costco and Aldi in the Australian market clearly shows the growing appetite from shoppers for great value grocery shopping and the continued expansion of both retailers into new states in 2015 and 2016 is set to have a lasting impact on the Australian grocery landscape and shopper behaviour.

This article was written by Nick Miles (Asia-Pacific Region Manager)
Nick heads up all of IGD's research and coverage on the Australian market. He is also responsible for conducting and shaping IGD's research programme across the Asia-Pacific region. Please get in contact if you have any queries [email protected]