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"...They sell their inventory and receive the cash from the customer before they have to pay the vendor. (Usually 30 days). This means that as Costco opens new stores they generate a positive cash flow from their vendors and their customers. Nice trick this. And it is something that other retailers can only dream about. Costco turns their merchandise12.1 times last year, versus 10.5 times at BJ's, and much slower rate at other traditional retailers..."

From the above statement, its seems to me that you are saying that a new store finances itself upon opening due to the rapid inventory turns. I agree that one of Costco's secrets is inventory turn. I was wondering though if the "new" stores are really cash flow positive right away. Since Costco really doesn't advertise, wouldn't there be a ramp up period for sales before a store became cash flow positive, and thus new stores could not pay for themselves, BUT existing stores could probably finance the new stores until they are mature enough to pay for themselves.

yofluke

(Long on Costoc)
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