Yahoo Finance Why Costco sells 93-inch $399.99 stuffed teddy bears
To its millions of members around the world, Costco (COST) is known for more than its bulk paper towels and Kirkland brand mixed nuts.
It has long been viewed as serving up a treasure hunt shopping experience. In other words, the warehouse giant sells merchandise you wouldn't expect to find inside a retail store that promises rock-bottom prices on everyday essentials.
For example, Costco sells caskets online. Once you are done buying a casket, you can purchase a vacation and a $329,000-plus 6.5-carat engagement ring.
Inside a new Costco store in Lake Stevens, Washington, we found a nearly $2,000 bottle of wine, an inflatable jacuzzi, and, of course, the legendary 93-inch, 48.5-pound stuffed Costco bear.
Costco's longtime CEO Craig Jelinek told Yahoo Finance that selling these products (which do in fact sell, says Jelinek) only enhances the shopping experience for members.
"It's just one of those things that powers the brand on exciting items," Jelinek said of the giant stuffed bear. "I got one of these for my grandkids and brought it back from Australia...Where we first brought them in was Australia. I said we need to move this everywhere. The bear has now been around for five or six years."
Naturally, these higher ticket items help to enhance Costco's top and bottom lines.
"People like to go shop in stores, it's the thrill of the [treasure] hunt, and that is what people love with Costco," Jefferies analyst Corey Tarlowe explained.
Indeed, executing on this treasure hunt experience has supported Costco's growth in 2022 and helped it win the Yahoo Finance Company of the Year award. More on that below.
Costco's 2022 at a Glance
Costco's same-store sales have outperformed conventional competitors: Costco's U.S. same-store sales for the nine weeks that ended October 30 increased by 10%.
By comparison, third-quarter same-store sales for discounters Walmart (WMT) U.S. and Target (TGT) rose by a far slower 8.2% and 2.7%, respectively.
Stacked up against its pure-play warehouse rivals, Costco's recent sales growth trends are more in line with competitors. East Coast warehouse club rival BJ's Wholesale (BJ) saw third-quarter same-store sales increase by 9.7% while same-store sales at Walmart's Sam's Club increased by 10% in the third quarter. But given that Costco is much bigger than Sam's, which has sales of about $59 billion, those same-store sales figures are impressive.
Costco had a bang-up year within its key operating metrics: For the fiscal year ending Aug. 28, Costco posted a 14.4% overall same-store sales increase, a 93% renewal rate for U.S. members, the addition of 7.3 million members, and a slight increase in net profit margins (a win in the hyperinflationary environment). Meanwhile, total cash clocked in at $11.1 billion, representing a hearty 34% of current assets.
Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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