Costco hits Cargo Club with store

Costco, the discount club retailer in which Littlewoods owns a 20 per cent stake, fired a further shot in the warehouse club battle yesterday when it announced that work had started on a fourth outlet in Liverpool. The store will open in November and create 250 jobs.

The announcement places renewed pressure on Cargo Club, the rival format run by Nurdin & Peacock, the beleaguered cash and carry retailer whose shares plunged after a profits warning last month. N&P's Cargo Clubs have been slow to catch on. The company has since abandoned its expansion plans to conduct a review of the trading concept.

Industry experts believe that Costco is performing better because it has adopted the US style of warehouse trading where a limited range of goods are sold at near to cost prices and profits are derived from the membership fees. Cargo Club has tinkered with the format, offering more choice, which weakens cash flow.

"It is a format that cannot be weakened successfully," one analyst said. "Adding a bit more retail to it just hasn't worked."

Cargo Club's problems have been exacerbated by the abrupt departure of David Poole, N&P's chief executive, last autumn.

Cargo Club faces a big hurdle next month when the membership cards at its first store in Croydon come up for renewal.