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Heads up Down Under
International sales numbers are likely to continue climbing if Costco’s success in Australia is any indication. Two years of successful operations at the company’s first location in Melbourne prompted the opening of two more locations, one in Canberra and one in Sydney. Five thousand customers showed up to the Sydney location for its first day, and another 8,000 have purchased memberships at the Canberra location.
Rumors are swirling about a second location in Melbourne. Costco’s international presence is thinner in Australia compared to its operations in other countries:
No. of Locations
Persons Per Costco Store
Source: Company press release. Population numbers from CIA World Factbook.
Australian markets are nowhere near as saturated as most of the other countries where Costco is operating. Only Japan and Korea show similar potential for expansion.
Australia makes cents
Given Australia’s strong economy, it’s logical for Costco to continue to expand there. The IMF recently projected GDP growth at 2% for the rest of the year and at 3.5% for next year. Though the state of the global economy may impact those numbers, Australia is in the midst of a mining boom driven by demand from China and other Asian economies that haven’t suffered as badly as other parts of the world recently.
Costco is a business that has proved resilient in good times and bad, as evidenced by its recent strong same-store sales in the U.S. Investors (including our Global Gains team) have their eyes trained on Australia and its economic potential. Those interested in American companies as international investments should consider adding Costco to My Watchlist to stay abreast of relevant updates and analysis regarding the company’s growth abroad.
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Fool contributor Aimee Duffy doesn't own shares of the companies mentioned in this article. The Motley Fool owns shares of Costco. Motley Fool newsletter services have recommended buying shares of Costco. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.