The new stores during the first quarter included some in malls, which is a relatively new phenomenon for the company, but the new locations are "no sea change," CFO Richard Galanti said in response to a question about whether the new locations signaled a change of direction for the company. "The malls are new to us in the sense that they are becoming available," Galanti said. "We view them as an additional opportunity, recognizing that there are plenty of malls out there…but I don't see this as a big sea change of events. We're still looking for all kinds of real estate."

Costco, which spent $702 million on capital expenditures in 2004 for the fiscal year that ended Aug. 30, has budgeted about $1 billion in capital expenditures in fiscal 2005, with plans to open 25 new stores. The first quarter openings put it on track on its expansion schedule, in which it spent about $211 million in the first quarter. The company's earnings would have been a penny per share higher without the hurricanes in Florida this fall, Galanti reported, saying that the hurricanes cost the company $6.5 million, or roughly 1 cent per share in earnings.

The company is hanging onto a significant portion of the gains it made against supermarkets in Southern California's strike last year, Galanti commented, saying "There is nothing unusual we are doing in Southern California in terms of marketing there versus anywhere else" to hold onto the gains. What has happened, he explained, is that many of the customers who began shopping at Costco during the strike have continued to shop there after the end of the strike.

In response to a question about Costco and other warehouse operators all claiming to be the low price leader, Galanti said that making apples-to-apples comparisons is difficult because the different operators all carry so many different sizes and models, particularly in the electronics arena, but "We still consider ourselves the absolute price-value leader." Costco and the other warehouse operators are gaining market share but they are not taking it from each other, they are "taking it from others," Galanti said.

Costco operates 449 warehouses, including 333 in the United States and Puerto Rico, 63 in Canada, 15 in the United Kingdom, five in Korea, three in Taiwan, five in Japan and 25 in Mexico. The Company also operates Costco Online.