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Worldwide Retail Industry

Worldwide Retail Industry. Amira Bennani Anne-Kathrin Florian Catalina Isaza Carolina Mansilla Mireia Ribas. Agenda. Industry overview Analysed Companies Qualitative Information Quantitative Information Conclusions. Key trends and development in global retailing.

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Worldwide Retail Industry

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  1. Worldwide Retail Industry • Amira Bennani • Anne-Kathrin Florian • Catalina Isaza • Carolina Mansilla • Mireia Ribas

  2. Agenda Industry overview Analysed Companies Qualitative Information Quantitative Information Conclusions

  3. Key trends and development in global retailing

  4. 1. Industry Overview Global retailing sales reach US$ 9.4 trillion in 2006 US $ billion % CAGR 2001-2006

  5. 1. Industry Overview US and emerging markets, major sources of growth US $ billion

  6. 2. Analysed Companies

  7. Wal-Mart is the largest food retailer in the USA • Tesco is the largest food retailer in the UK Wal-Mart • The largest retailer in the world • Successful growth during the last years • Website for investors with all information needed Tesco vs Wal-Mart

  8. More than 176 million consumers in 13 countries • Revenue 2007: $374.5 billion 8.6% over 2006 • Net profit 2007: $12.7 billion 12.8% over 2006 • 2.1 million employees • More than 7600 facilities Wal-Mart

  9. German retailer EDEKA • German-based food trade group REWE Rewe • Although both companies’ annual reports are fulfilling most of the criteria, Rewe provides more information for potential investors. • Edeka’s report is not available in English. EDEKA vs REWE

  10. International food trade and tourism company • Turnover of €32.7 billion in 2007 • More than 270,000 employees • Present in 14 European countries • Headquarters: Köln in Germany • In European food trade, Rewe Group is the No. 3 REWE

  11. Almacenes Éxito S.A (Colombia) • Publix Super Market (United States) Both supermarkets have enough qualitative information. Éxito • Its information is more friendly and easy to find • Informative web site Éxito vs Publix

  12. Theleading retail company in Colombia • Represents 40% of the sales in theColombian retail market • Has different retail formats: Supermarkets, hypermarkets and discountretails • 257 retail outlets in 47 Colombiancities • Casino Group (French) isthebiggestshareholder Exito

  13. Auchanis a French retail chain • Carrefour is a Frenchmultinational Carrefour Carrefour isthesecondlargestretailer in theworld and itprovides a lot of informationforinvestors. Carrefour vs Auchan

  14. The world’s second-largest retailer and the largest in Europe • $102.442 billion in sales • Presence in 30 countries • Has over 15,000 stores, either company-operated or franchises Carrefour

  15. Mercadona vs Caprabo • Mercadona (Spanish) • Caprabo (Spanish) • Mercadona • Specific information about Mercadona is easier to find than for Caprabo. • Caprabo was bought by Eroski (group Mondragon) and its information is more global.

  16. Mercadona • Familiar capital. • Juan Roig, CEO+ main shareholder (80%) • 1,137 district stores • 60,000 workers • Market quota on total alimentation/food area in Spain of 12.1% • Reach more than 3.7 million homes annually

  17. Smiley Chart

  18. Smiley Chart (2)

  19. 3. Qualitative Information What is the most extraordinary qualitative information we found in the annual reports of the companies?

  20. Wal-Mart • Multiple Retail concept • Wal-Mart discountstores, Supercenters, neighborhood Markets, and Sam’s Club • Wide merchandise concept: • house wares, consumer electronics, sporting goods, lawn and garden items, health and beauty aids, apparel home fashions, paint, bed and bath goods, hardware, jewelry, automotive repair and maintenance, toys and games, and groceries • Corporate Social Responsibility: • In 2005, Walmart donated $245 million in cash to support charities and organizations throughout the U.S.

  21. Corporate Social Responsibility Rewe is one of the first supermarkets that now uses green electricity in 6000 of its stores Human Resources and Relationships Cofounder and sponsor of the “5 a day” initiative, encouraging people to eat more healthy. It is sponsoring the initiative “Class in Sports” to promote physical fitness in schools REWE

  22. Exito Business Strategy • Social Responsability • Has itsownfoundationcalled Fundación Éxito, whichimprovestheproperdevelopment of poorchildren. In 2007 theyinvested $11,099 millions (€3,8 millions) for more than 250.000 people. HistoricalInformation In the web pagewe, theannualreport and CEO reportsince 2004 can be found.

  23. Corporate Social Responsability • Carrefour ensuresthatitsproducts are environmentallyfriendly • Theyputemphasisonreducinggreenhouse gas emission Clarity of businessstrategy. Tobeamongthethreeleadingplayers in each of themarketswhereitispresent. Carrefour

  24. Mercadona • Corporate Social Responsibility • Social productivity • Natural Resources: • Ecodesign • Saved 40 million litres of water and 92 million of kwh in 2007 • Dialogue with the Society • Human Resource and Relationships • 72 million investment in formation • All workers with fixed contract and 67% women • Conciliation family-work • 900 promoted workers

  25. 4. Quantitative Information Ratios Cash ratio Liquidity Gross Profit Margin Profitability Days of inventory Sales/square meter Efficiency DividendYieldShareholder

  26. Cash Ratio • Rewe has the lowest liquidity • Mercadona has the highest liquidity • The Average did not change between 2006 and 2007 • Éxito and Rewe showed relevant increase

  27. Gross Profit Margin • The Average was 25% in 2006 and 2007 • Rewe has thehighestmargin and increasedit • Carrefour and Walmarthavelowermargin vs the average

  28. Days of Inventory • Éxito has a slow inventory rotation • Mercadona is managing their inventories effectively • The average in this industry is 41 days

  29. Sales/Square meter • The average decreased to €4130/sm in 2007 • Walmart has the lowest ratio although it is the biggest retailer in the world! • Mercadona is performing best, twice the average ratio

  30. DividendYield • Its not easy to find this information. • In this industry dividend is a good source of profit for shareholders, it is over 1%.

  31. 5. Conclusions The industry • Very attractive, as supermarkets achieve the highest sales of the Retail Industry • US and the emerging countries are playing the major role in this growth Qualitative Analysis • Carrefour and Walmart are best in terms of providing information in a shareholder-friendly way • Here, Mercadona has a lot of weak points

  32. 5. Conclusions Ratio Analysis • Mercadonaisattractive in termsofliquidity, itmanagesinventoriesefficientlyandit has thehighest sales persquare meter • Rewethereforeisveryprofitablebutisratherweak in theother ratios • Carrefour has themostattractivedividendyield

  33. Anyquestion?Thankyou.

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