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.

Costco is a Motley Fool Stock Advisor recommendation, and Wal-Mart has the Motley Fool Inside Value stamp of approval. Either service is free for 30 days.

Fool contributor Anders Bylund holds no position in any of the companies discussed here, nor does he shop at warehouse stores these days. They're just too darn far away from his home out in the boondocks. You can check out Anders' holdings if you like, and Foolish disclosure will make a bull out of any bear, origami-style.