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Strategies & Market Trends : Bill Wexler's Profits of DOOM -- Ignore unavailable to you. Want to Upgrade?

To: Rex Dwyer who wrote (3290)	10/2/1998 2:53:00 AM
From: Bill Wexler	Read Replies (4) \| Respond to of 4634

<<Don't you think that some of COST revenues this last year were caused by stock bubble consumer confidence?>> No. I think that all COST revenues were "caused" by the ability of COST to deliver excellent quality and customer service at the lowest possible price. Don't reach for complex explanations and economic sophistry. Occam's razor applies. <<I know around here in the Silicon Valley, many of the millionaires love to get great deals at COST.>. And if they feel their incomes getting squeezed, I bet they'll appreciate Costco even more. <<So I bet that many "well to do" middle class types are spending a bit more than they should.>> Costco sells food, gas, pharmaceuticals, pizzas and everyday household and small business necessities. The beauty of COST is the fact that the company targets only the most popular, in-demand items and then gets to work figuring out how to deliver them at great discounts. The average mega retailer has something like 30 - 50,000 SKUs at any one time. COSTCO rotates perhaps 4,000 SKUs...and they fly off the shelves. Compare the inventory turns at COST to ANY other retailer. Go to the San Jose or San Francisco Costco and have lunch at the snack bar. Watch the shoppers. Take note of what they're buying and the size of the lines. Walk around the warehouse and note how Costco sells the infrequent "treasures". Maybe one week its a palette of guitars, the next it'll be fresh lobster tails. I don't believe shoppers are spending "more than they should". They are getting superb quality and the best prices. That works in any economic climate. By the way, here's a recent report of a Costco opening from middle America. Note that Detroit already has well-established Sam's clubs. Message 5882291 When is the last time you heard of the police coming out to direct traffic at the opening of a retailer because of the crushing crowd? I am convinced that Costco is about to enter another explosive growth phase. I also believe that the stock is grossly undervalued. It is a buy now, and as long as the story is on track....keep buying.