One of Larry's gripes about Costco (NASDAQ:COST) is its lack of geographic diversification, based on 35% of the domestic store locations being in California. OK, so it's a little bit out of proportion, but California does have 12% of the nation's population, with above-average median income and spending power. And Costco is spreading its reach across the globe, too, with a significant presence in Mexico, Canada, and the United Kingdom. South Korea, Taiwan, and Japan are the up-and-coming growth markets for the retailer.

And I don't think my esteemed opponent fully understands the nature of that sales-returns allowance. Costco recently changed its return policies to stop the all-too-common practice of buying big-ticket items like a nice plasma TV and then returning it right after the Super Bowl, or when the thing breaks eight years later. Thus, sales last quarter were reduced as a result of posting an increase for the sales-returns reserve balance. However, the old policy was a free, eternal product warranty, and I'm glad to see that much-abused program go away. While it might have affected last quarter, I believe the new policy will benefit the company in the future.

In general, Larry is picking nits like an Insect-O-Cutor picks off gnats. The margin decline is glacially slow and could easily be reversed if management had a mind to do so. And BJ's (NYSE:BJ) takes a wider variety of credit cards? Well, show me a consumer in Costco's target demographic who wouldn't qualify for an American Express, and I'll show you a winged hog over Cincinnati -- not to mention that until last year, Wal-Mart's (NYSE:WMT) Sam's Club used to accept only Discover, which to my mind is the least popular major credit card on the market.

Costco is a huge warehouse retailer, and to me, it beats its competition among rival warehouse club operators. While Costco's forward earnings multiples aren't as attractive as those of its rivals, I wouldn't consider the stock expensive, since the company runs a superior business that deserves higher prices.

Love the company; love the stock.

Check out the other arguments in this Duel, and then vote for a winner.