INTERVIEW-Costco says turmoil won't derail Australia plans

By Victoria Thieberger

MELBOURNE (Reuters) - Costco Wholesale Corp (COST.O), an aggressive U.S. discount retailer, said global financial turmoil and an economic slowdown in Australia have not slowed its expansion plans.

Costco, whose U.S. warehouses sell everything from groceries to big-screen televisions, is building a large-format store in Melbourne, Australia's second-biggest city, and is actively looking for further sites.

"We still plan to have one site in Melbourne and one in Sydney, and we're still going full-speed to achieve that," country manager Patrick Noone told Reuters.

Consumer demand in Australia has slumped this year, and some economists are tipping a possible recession if global demand falls sharply.

But Noone said in a telephone interview that a consumer downturn was no reason to delay the discount retailer's entry into Australia, where it hopes to challenge the supermarket duopoly of Woolworths (WOW.AX) and Wesfarmers' (WES.AX) Coles.

"We have a robust business model. Costco does well in a down market and an up market because we are a discount brand name and people see bargains with us," he said.

He said Costco's comparable store sales around the world have been quite strong compared with other retailers, even as consumers slashed spending.

With its slim margins and low-cost structure, Costco has the ability to aggressively challenge the dominant chains, Woolworths and Coles, on price.