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Beyond the Border

Costco, Amazon, and Starbucks are already among the nation's top retailers, but that's not stopping them from aggressively pursuing growth opportunities overseas.

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Three of the nation’s biggest retailers—Costco, Amazon, and Starbucks—are eying international markets to boost sales, but they’re taking a cautious approach, focusing primarily on countries where they already have a footprint and building out their operations there.

International sales are helping to fuel growth for these retailers and are an important part of their strategy for the future. But the international plans detailed by the retailers in recent weeks indicate the companies see an opportunity to squeeze better productivity and margins out of existing foreign operations rather than spreading themselves too thinly around the world.

International sales are an important segment for these big retailers and have had an even bigger impact lately due to favorable foreign currency exchange rates. Over the past year, some foreign currencies have been stronger versus the dollar, which results in stronger international sales when translated into dollars.

Costco Wholesale Corp. opened its first store in Australia in fiscal year 2009, one of eight international locations it opened that year. But the discount warehouse chain is now focusing solely on its existing markets, with plans for three stores in Canada and one in the U.K. in fiscal 2010, which ends in August.

In fiscal 2011, the company expects to launch eight new international locations, but again in countries where it already does business: two in Canada, two in Japan, and one each in the U.K., Australia, Korea, and Taiwan.

“We’ve shown that the concept can be exported to other parts of the world, but we’re going to do it in a methodical way,” said Costco chief financial officer Richard Galanti.

Costco said comparable same-store sales—sales at stores that have been open for at least a year—jumped 26 percent internationally in its fiscal third quarter ended May 9, and grew 6 percent in the U.S. (Excluding gasoline inflation and the favorable impact of foreign currency exchange rates, same-store sales growth in the quarter would have been 8 percent internationally and 3 percent in the U.S.)

Costco didn’t break out the dollar value of international sales for the quarter. The company’s international sales made up about 20 percent of its $71.4 billion in annual revenue in fiscal year 2009.

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