Module 7 grocery stores costco
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Module 7 Grocery Stores Costco. Megan Wiethoff. Costco Overview. Founded in 1983, in Seattle, WA Originated the membership concept for wholesale club retailers Offers members low prices on a limited selection of high-quality, popular brands Warehouses are designed to be cost efficient

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Module 7 Grocery Stores Costco

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Module 7 grocery stores costco

Module 7Grocery StoresCostco

Megan Wiethoff


Costco overview

Costco Overview

  • Founded in 1983, in Seattle, WA

  • Originated the membership concept for wholesale club retailers

  • Offers members low prices on a limited selection of high-quality, popular brands

  • Warehouses are designed to be cost efficient

  • Has been increasing its fresh food selection, up to 13% of total sales


Industry performance

Industry Performance

  • Fluctuations in disposable income has caused consumers to reduce the quality and quantity of goods they purchase

  • Growth in the past 5 years is mainly due to spending on consumables and expansion initiatives

  • The industry is highly saturated and has low profit margins

  • Warehouse clubs and Supercenters have increased their grocery offerings, which increases competition in the industry

  • High food prices have also limited profitability


Forecasting

Forecasting

  • Assumptions

  • Sales growth rate6%

  • Enterprise profit margin (EPM)2%

  • Enterprise asset turnover (EATO)9


Cost of enterprise capital

Cost of Enterprise Capital


Discounted cash flow

Discounted Cash Flow

  • Sales Growth: 6% Cost of Capital: 7.53%


Residual income model

Residual Income Model

Sales Growth: 6% Cost of Capital: 7.53%


Discounted cash flow changing growth rate

Discounted Cash Flow: Changing Growth Rate

Sales Growth: 6% Future Growth: 3% Cost of Capital: 7.53%


Residual income model changing growth rate

Residual Income Model: Changing Growth Rate

  • Sales Growth: 6% Future Growth: 3% Cost of Capital: 7.53%


Questions

Questions?


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