Costco achieved a milestone in South Korea with annual sales exceeding 6 trillion won for the first time. (Image courtesy of Yonhap)
SEOUL, Nov. 21 (Korea Bizwire) – While Costco, the U.S. warehouse discount store, achieved a milestone in South Korea with annual sales exceeding 6 trillion won for the first time, its social contributions in the country have dwindled.
Moreover, the company remitted a dividend to its U.S. headquarters that surpassed its annual operating profit. Costco Korea’s dividend for the current fiscal year stands at 200 billion won, almost triple last year’s payout of 70.9 billion won.
As per an audit report released by Costco Korea on its electronic disclosure system this Monday, the company’s sales for the current fiscal year (September of last year to August of this year) reached 6.7 trillion won, reflecting a 9.6 percent year-on-year increase. This marks the first time Costco has exceeded 6 trillion won in annual sales since its first Korean store opened in 1998.
Costco Korea, wholly owned by Costco Wholesalers International, Inc., operates stores in 18 locations across the country, including Seoul.
While the operating profit for the current fiscal year was 188.7 billion won, experiencing a 2.8 percent decline from last year, net income increased significantly by 39.5 percent year-on-year, reaching 141.7 billion won.
In contrast, the company’s charitable donations amounted to 1.18 billion won, reflecting an 8.1 percent decrease year-on-year.
Despite Costco’s success in Korea, the company has faced criticism for its treatment of domestic workers, including instances such as a worker’s death and the absence of workplace daycare centers.
The company has been labeled “uncooperative” by Korean administrative agencies for proceeding as usual despite recommendations to support small businesses. In 2019, the Ministry of SMEs and Startups advised Costco to temporarily halt the opening of its Hanam store, citing potential harm to nearby small businesses. Costco ignored the recommendation, resulting in a 50 million won fine. Similar fines were imposed in 2017 when the company’s Songdo store in Incheon opened under comparable circumstances.
Further criticism arose regarding Costco’s response to the death of a worker at the company’s Hanam store in June. The deceased employee’s family filed an industrial accident claim in August, alleging that the worker was subjected to excessive work in the heat. The Ministry of Employment and Labor is currently investigating potential violations of laws, including the Serious Accident Punishment Act, related to the incident.
Ashley Song (ashley@koreabizwire.com)
