Dan Hanson, Portfolio Manager at Jarislowsky Fraser Global Investment Management, says Costco Wholesale Corporation (NASDAQ:COST) has a strong business model that is holding the company up against online retail migration.
In the context of the online world taking over, we’ve seen a number of business models that have proved very resolute. Costco and TJX are two that I would highlight where we see both companies delivering a value proposition to customers that’s resulted in consistent sales increases, and we think a continued runway for growth and competitively differentiated models.
In the case of Costco, ultimately, it’s about value to the customers. You see behind the cash register in any Costco a pledge that their first priority is to their customers, their second priority is to their suppliers, to be a good partner, and thirdly to their employees. And if they get all the above right, they know that the business and shareholders will get a fair return, and we think they’ve really lived by that framework.
In our mind, that’s a great example of how environmental, social and governance integration or sustainability can inform analysis of a business to really identify a deep moat.
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