Module 5 grocery stores costco
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Module 5 Grocery Stores Costco. Megan Wiethoff. 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

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Module 5 Grocery Stores Costco

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Module 5 grocery stores costco

Module 5Grocery StoresCostco

Megan Wiethoff


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


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


Revenues

Revenues

  • Assumed Growth Rate = 8%


Epm from sales

EPM (from sales)

  • Assumed rate = 2%


Module 5 grocery stores costco

EATO

  • Assumed rate = 9


Forecasting

Forecasting

Assumptions

Sales growth rate8%

Enterprise profit margin (EPM)2%

Enterprise asset turnover (EATO)9


Valuing costco

Valuing Costco

Assumptions

Sales growth rate8%

Enterprise profit margin (EPM)2%

Enterprise asset turnover (EATO)9


Discounted cash flow model

Discounted Cash Flow Model


Questions

Questions?


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