While Costco, the U.S. warehouse discount store, achieved a milestone in South Korea with annual sales exceeding US$4.6 million for the first time, its social contributions in the country have dwindled.
Moreover, the company remitted a dividend to its US headquarters that surpassed its annual operating profit. Costco Korea’s dividend for the current fiscal year stands at $155,512 almost triple last year’s payout of $55,129.
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 $5.2 million, reflecting a 9.6 per cent year-on-year increase. This marks the first time Costco has exceeded $4.6 million in annual sales since its first Korean store opened in 1998.
Costco Korea, wholly owned by Costco Wholesalers International, operates stores in 18 locations across the country, including Seoul.
While the operating profit for the current fiscal year was $146.853, experiencing a 2.8 per cent decline from last year, net income increased significantly by 39.5 per cent year-on-year, reaching $110.276.
In contrast, the company’s charitable donations amounted to 1.18 billion won, reflecting an 8.1 per cent 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 centres.
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 $38.911 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.
This story was originally published by Ashley Song, via Korea Bizwire.
