Ben Gilbert: evaluation

Transcript context

…Talk about a SaaS company. Yeah, but it's not quite true. It is accurate to say that membership fees represent about 70% of the company's operating income with the other 30% of the profit margins coming from retail. It's been a little bit more than 30% in recent years, but that's the historical split. Think about it as a 70/30 thing. It really is staggering that a business that does $230 billion top line, 70% of the profits can come from the $4 billion of revenue they generate from memberships. That tells you how razor-thin the margins are on their retail business, almost to the point where you're like, why do they care about growing sales at all? All they should care about is increasing retention of members. The split is just significant enough for the retail business where you're like, okay, yeah, we should care about growing sales in the retail business. But if it wasn't 70/30, if it was 90/10, or 95/5, you'd be like, well, I'm actually not sure why we care about making a single nother sale of toilet paper, because unless it is increasing the likelihood someone retains, I don't care about it. They're not quite there, but they're almost there. Except though, the way that you grow memberships is your grow retail sales.…

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