Discounter Costco Wholesale appears to have finally achieved critical mass, six years after entering Australia, reporting a strong rebound in profit in 2015 as sales soared to $1.3 billion.
Accounts lodged with the corporate regulator last week showed Costco Wholesale swung to pretax profit of $22.7 million in the 12 months ended   August 31 from a pretax loss of $10.7 million in 2014, when the company invested heavily in new stores, and a $4 million profit in 2013.
Revenue jumped 50 per cent in 2015 to $1.323 billion from $878.5 million as sales grew at existing stores and the discounter opened two new stores, taking its network of warehouse-style stores to eight.  
Costco opened its first store in Adelaide in   November 2014 and its third store in &shy;Melbourne, at Moorabin, last month.
In 2016 Costco plans to open its third Sydney store, at Marsden Park, its second in Brisbane and its fourth in Melbourne, at Epping. It has also opened four petrol stations, in Crossroads (NSW), North Lakes (Queensland), Canberra, and Adelaide (Kilburn).
Sales have more than doubled over the past two years from $612 million in 2013, outpacing growth at rival discounter Aldi and the big supermarket chains.

Deeply discounted prices
Costco's stores are three or four times the size of a typical supermarket - about 14,000 square metres - and sell fresh, frozen and packaged food and groceries, often in bulk, as well as a wide range of general merchandise, from diamond rings and televisions to coffins and cubby houses, usually at deeply discounted prices.
Costco makes most of its money selling memberships, rather than through mark-ups, and its prices are on average 20 to 30 per cent lower than those in mainstream supermarkets, department stores and consumer electronics chains.
Costco's latest accounts show gross profit was $193.7 million and its gross margin was 14.6 per cent of sales, up from 14.3 per cent in 2014. That's about one-third the gross margin at Myer and David Jones and less than half the gross margin at Coles and Woolworths.
Costco does not publish membership numbers, but managing director Patrick Noone indicated earlier in 2015 the company had "hundreds of thousands" of members, who pay an annual fee of $60.
Costco has captured at least 1.2 per cent of the $90 billion grocery &shy;market, IBISWorld says, and has taken sales from a diverse range of general merchandise and consumer electronics retailers.
Analysts expect Costco to reach 20 stores in Australia and for sales to reach $4 billion over the next three to four years. The retailer could extend its reach even further if it opened an online store, emulating its US parent, which has online stores in several countries, including the US, Canada, Britain and Mexico.

Expansion plans constrained
However, like Aldi, Costco's expansion plans have been constrained somewhat by restrictive planning and zoning laws, which limit its capacity to find and develop suitable sites.
It took Costco two years to secure approval for and build its first store, at Docklands in Melbourne, and four years to get approval for and build its first Sydney store, at Auburn.

 Costco's US parent has injected almost $500 million into the Australian operations, including a $20 million top-up in 2015.
Retained losses fell from $44.5 million in 2014 to $30.2 million in 2015 after the profit rebound, and the group booked foreign exchange gains of $7.8 million.