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Opinion
Megan McArdle

Wal-Mart vs. Costco III, Why My Critics Are Wrong

Companies are complicated.  You can’t just change the bits you don’t like and have the rest tick along exactly as before.

Well, my piece on Costco Wholesale Corp., Trader Joe's and Wal-Mart Stores Inc. has attracted a lot of heated argument. Why did I use worldwide figures instead of U.S. figures for revenue and profit per employee? Why didn't I point out that Costco's profit margin is much lower than Wal-Mart's? (Aside from the graph in which I pointed that out, anyway.) And if Costco's business model is so much better than Wal-Mart's, maybe Wal-Mart should start putting stuff on pallets, huh?

First things first: I used worldwide figures because international profit figures aren't broken out separately on its financial statements. But how much difference that distinction would have made is unclear. Both companies get about two-thirds of their revenue from their U.S. operations, which is also approximately the percentage of their employees who work in the U.S.