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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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Presentation Transcript
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%
slide6
EATO
  • Assumed rate = 9
forecasting
Forecasting

Assumptions

Sales growth rate 8%

Enterprise profit margin (EPM) 2%

Enterprise asset turnover (EATO) 9

valuing costco
Valuing Costco

Assumptions

Sales growth rate 8%

Enterprise profit margin (EPM) 2%

Enterprise asset turnover (EATO) 9

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