Costco NZ closer to breakeven

10th February 2025 By Paul Yandall | paul@propertyticker.co.nz | @propertyticker

US supermarket giant Costco’s sole New Zealand store turned in an improved performance in its second full year of operation, moving towards the black at the bottom line.

The annual financial report for Costco Wholesale New Zealand showed the $100m store which started trading in Auckland’s Westgate in September 2022 recorded total sales revenue of $361.5m for the 52 weeks to 1 September 2024.

Costco sales include both items selected from its range of around 3,500 products off the floor of the three-level, 15,000 square metre warehouse in northwest Auckland, plus memberships, which are priced at $60 per head in New Zealand.

Its additional $20m of revenue in FY24 reflected an increase of 6% compared with a year earlier, when sales came in at $341m.

Costco kept its cost of sales largely in check, adding just $9m to the $328m total, which meant its gross profit was improved to $32.7m, up from $20.8m a year earlier. It had a gross profit margin of 9.06%.

On top of this, the membership-based retailer, which is one of the world’s largest with 803 outlets globally, managed to trim its general and administrative costs by $4m.

Together, this meant its operating loss narrowed from $17.5m in 2023 to $1.6m in FY24.

And thanks to some finance income – as opposed to the prior year’s finance expense – at the pretax level, the company landed about $833,000 in the black, compared with a loss of $20.5m.

However, after its income tax bill of $1.76m, the operation reported a total comprehensive loss of around $929,000.

While the brand arrived with much fanfare in New Zealand, in reality, a single store can do little to change the retail grocery market dominated by Foodstuffs and Woolworths.

For comparison, Foodstuffs North Island posted a total of $10.8bn in revenue from both its retail activities across Four Square, New World and Pak’n Save plus wholesale sales from Gilmours in the 52 weeks to 31 March 2024.

Costco would likely only ever add a couple of additional stores domestically, with New Zealand and Australia managing director, Patrick Noone, in 2023 suggesting it would likely open a second store in Auckland before looking further afield.