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Strategies & Market Trends : Value Investing

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Jurgis Bekepuris

Lance Bredvold

To: bruwin who wrote (62976)	12/17/2019 10:32:34 PM
From: Spekulatius	2 Recommendations Read Replies (1) of 78774

Some of these retailers can generate great returns on relatively slim margins but having high inventory turns (high sales /sqft or invested capital) yielding a high ROI. Costco is a prime example of this. They run on slim margins, by design and the earnings are basically coming from membership fees. Customers spent a lot of money in their strokes, because the prices and the quality are great and perhaps also to make the membership fees worth it. It’s a flywheel effect. Then there is a fact that retail scales. It’s basically ally just a matter of duplicating stores and the distribution system. So once a winning combination is found, it can run very far. That’s why retailing has few big winners and a lot of losers.

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