Richard Galanti: I would say it’s a combination of issues. In some countries, I mean, if you look at Korea, Taiwan, where we have whatever, 15 or 16 locations in each country, very successful. It’s a little harder to find the next location just from a real estate standpoint. We — if you look in Japan where we have plenty of future opportunity, we’ve got 30-plus now. And — but again, it’s a little bit of real estate. If you look at places like China or Spain, one of the challenges is you want — you like to be able to ideally bring over more than a handful of people from the existing locations in the new one. It’s a very hands-on operation. I think one of the things that we felt we mentioned that we had success when we first opened our first unit in Shanghai is we had at least 60, 70 people move there from Taiwan for promotions and for interactions, not just in the office and the buying offices, but even in the key supervisor and manager positions within the warehouse.
And so it takes a little longer. And — but we’re working hard at it but it’s a very hands-on experience.
John Heinbockel: Thank you.
Operator: We’ll take our next question from Kelly Bania with BMO Capital Markets.
Kelly Bania: Hello, Richard. Thanks for taking our questions. Just wanted to kind of follow up on Scot’s question. I think your average sales per club in the U.S. and Canada is around $300 million at this point. And just curious on the status of how many clubs are doing kind of well over that and are maybe in some need of relief in the form of self-cannibalization and more clubs nearby. And a follow-up as well on International. Just as we think about the next maybe three to five years, are there any countries that might be disproportionately getting more of the growth here?
Richard Galanti: Okay. What was the first part of the question, again?
Unidentified Company Representative: The average sales.
Richard Galanti: Average sales. I don’t have the numbers in front of me, but I know in fiscal ’23, we had something like 25 or so locations that did over $400 million and another 160 or so that did $300 million to $400 million. Those are huge numbers. And certainly, as we get 350-plus and one of them, by the way, they did over 400 did a few million over $600 million. And so generally, when it starts getting — when it starts having a three in front of it, certainly at $350 million, we want to start looking to see what we can do to cannibalize it, frankly, and to have more growth in that market. And so hopefully, that’s our — one of our bigger problems and challenges that we have more of those each year. So I think that will continue.
Again, if I look back five, eight years ago, even assuming whatever inflation number you want to assume, I think we’ve done a little better than that in terms of the sales volumes. And so that’s good news for us that we’ll continue to do that. Internationally, again, I’m just looking at the map of where we are. Certainly, we only have four locations in Spain. We’ve actually added a few on a base of 30-plus in the U.K. We think we have more opportunity in Mexico. In Japan, where we have something in the low 30s, certainly, it’s done well there, and there’s many more markets and population there that we can go to. Australia is, whatever two-thirds — a little under two-thirds of the size of Canada where we have 105 or so locations. And in Australia, we have 15.
I’m not suggesting we’re going to have two-thirds of 105 there anytime soon. It takes us 35-plus years to get there in Canada. But we think that those are the opportunities. It’s not like we’re looking for a lot of other new countries at this juncture. We’ve done a few new countries, those single locations like in Sweden and Iceland and Auckland all being somewhat managed buying wise somewhat operationally by host country in the case of Scandinavia by the U.K., in the case of Auckland by Australia.
Kelly Bania: Thank you.
Operator: We’ll take our next question from Scot Ciccarelli with Truist.
Scot Ciccarelli: Good afternoon, guys. So Richard, last quarter, you talked a bit about Costco Next. And I guess my question is, how big of an impact is that program having on your e-com sales at this point, number one? Number two, kind of related to that, any change in your betting of what vendors operate on that program, just thinking about the quality control aspect? Thank you.
Richard Galanti: Well, first of all, it’s still very small relative to our company. And the fact is, is that the Costco net sales currently are not in our sales. It’s — we got to commission, so it’s kind of like 3P, if you will, 3P sales. And at some juncture, some of their rules — accounting rules where you can include it in sales based on what risk and what ownership level you have in the items. But at this juncture, those sales, it’s more of the market value and just the commission in our number. In terms of how we vet, we do it the same way we vet items. We want items that make sense to provide value, and we have a team that is here that are vetting every — each and every one of those. I think we’re up to about 70 — about 65 current suppliers on there and we’ll certainly have many more as we go forward.
Scot Ciccarelli: So presumably, if that program keeps growing, should that be a natural gross margin driver for you over time? I know it’s small now, but if you’re just collecting the commission, presumably that’s kind of 100% margin, right?
