This report is going to look at J Sainsbury and evaluate the aspects of the company’s financial position, performance and strategy. The original numbers and base information have been gathered from Sainsbury’s Annual Reports 2010-2013, which seek to meet predominantly the needs of Sainsbury’s shareholders. All numbers not in percentages are in £million unless otherwise stated. The figures are taken from J Sainsbury’s group accounts, which is made up of retailing, financial services and property investment. Its segment revenues solely comprise of retail business and therefore the financial reporting will be based on Sainsbury’s retail sector alone. Financial performance Sainsbury’s has a 16.8% market share in the UK supermarket industry. It has increased its property market value over the last four years by £1.7billion and within the last year has opened 14 new supermarkets, 87 convenience stores and created 5000 new jobs. In addition, total sales have reached £25,632 million, a 4.3% increase from the previous year. It has also had thirty-four consecutive quarters of like-for-like sales growth. These initial figures indicate that Sainsbury’s is in a strong position. The gross profit margin has remained stable since 2010, increasing from 5.42% to 5.48% in 2013, a 0.01% increase over the four years. These figures are relatively low because the retail industry operates on low prices. Supermarket retailing is a low margin business and therefore prices have to be kept low to remain competitive. The addition of new space acquired has contributed to higher operating costs, which has kept the gross profit margin low, however, the gross and operating profit margins were maintained despite continued cost inflation, representing stabilit... ... middle of paper ... ... and 2012 due to Sainsbury’s higher rate of dividend. This general trend shows that Sainsbury’s will be in a position to maintain this dividend for the foreseeable future. Sainsbury’s has a low dividend cover and its rate of dividend directly reflects its earnings per share and therefore increases in dividend are implemented only once increased earnings are secure (Johnson, Scholes and Whittington, 2008). Shareholder returns are in the form of dividends. The value of capital remains stable. Its small growth in dividend is attributable to investment in expansion, which will ultimately provide long-term returns and profit to shareholders. Price/ earnings ratio is the most widely equity valuation multiple. Sainsbury’s price/ earnings ratio, a measure of “payback”, has been gradually decreasing, indicating that earnings are increasing as prices are remaining stable.
Founded in 1986, Pret A Manger is a fast food chain, which produces freshly prepared, natural food with over 250 stores throughout the United Kingdom, France, Hong-Kong and the United States. Unlike most fast-food chains, Pret is a private company; they do not face the same pressure to grow as a public company does. However there are many factors that affect Pret A Manger’s marketplace such as economy, competition, technology, political environment, and the standard of living. This report evaluates major internal and external factors affecting Pret A Manger using various analytical techniques.
The objective of this report is to give an overall view on research and analysis to regards of two companies, Wm Morrison Supermarkets Plc and Tesco Plc that I have chosen for. In this report, I will be comparing two companies’ financial analysis based on their comprehensive income and balance sheet for one year; and also will be comparing their generating cash ability, cash management and financial adaptability based on statement of cash flows for the past two year and also determine whether the two companies have the ability to repay their debts to their creditors, generating into cash and going concern which related to finance.
This is the second part of the strategic assignment. In this report the competecies, culture and resource analysis of Tesco is presented. Furthermore in this report SWOT analysis of Tesco is presented and then two strategic options are suggested to Tesco. The strategic options suggested are then evaluated through the SAF model.
Introduction The purpose of this report is to undertake financial analysis of the position of the three major supermarket chains (Tesco plc, Morrison plc and Sainsbury plc) in the UK, using the financial tools such as Horizontal and Vertical Analysis and Ratio Analysis. The calculations done are considering the figures from the income statement and balance sheet of these three companies for the last 2 years (2008 & 2007). Doing these calculations is an effort to find out the current position and if any forecast on their performance. Tesco Plc *Interpreting the Horizontal and Vertical *Analysis The balance sheet’s horizontal analysis reveals the first worrying statistics about the company- the fact that stock level has increased by 25.84% in the year, even though net assets have increased by only 12.59%. The vertical analysis of the balance sheet again highlights the increase in amount of stock held by the company at the end of 2008 and increase in current assets. Interpreting the Ratio Analysis By looking at the ROCE* ratio it is clear that the business has not generated any higher return in the period 2007-2008. Though there is a marginal decrease in the returns (0.14% from 0.16%), however when compared with returns of other competitors Tesco plc has performed much better. Drop in asset utilisation ratio in the year 2008 indicates that the company did not use its assets efficiently to generate sales. As a result profit margin dropped down to 5.91% in 2008 from 6.21% in the year 2007. The Acid test ratio also doesn’t meet the ‘ideal’ ratio of 1:1. In other words Tesco had only 38p of quickly realisable assets to meet each £1 of current liabilities. Stock turn shows the effect of increased stock at the end of 2008 as it s...
This assignment will attempt to determine why Marks & Spencer nearly collapsed and what they have achieved in terms of success and failure as part of their recovery programme.
J Sainsbury's aims and objectives Their business is now focused very much on Sainsbury’s Supermarkets and Sainsbury’s Bank following the sale of Shaw’s
Over the years, Tesco has recorded growth which has been achieved through different strategies. The company has adopted its growth strategy which has been implemented in four different parts. One has been emphasis on the growth of Core UK business in order to expand internationally. This growth has allowed that company to position itself in food and nonfood sectors based on retailing services. Over the years, the company has witnessed financial fortunes which have been reflected in its growing sales.
“Going forward, the company is well positioned for future growth, and Nigel and his team remain focused on driving franchisee profitability and delivering shareholder value” shares Lead Director Raul Alvar...
Challenges in Today's U.S. Supermarket Industry. 2014. Challenges in Today's U.S. Supermarket Industry. [ONLINE] Available at:http://msdn.microsoft.com/en-us/library/aa479076.aspx. [Accessed 31 March 2014].
Sainsbury’s is in the market of an oligopoly and few big firms run this kind of market. One of the objectives of Sainsbury’s is to gain market share. Sainsbury’s will be looking to beat competitors. To beat competitors Sainsbury’s will need to research and see what business activity they do compare to Sainsbury’s. If they research they can think of way to beat competitors in the market.
The main symptom and concern is that Scotts’ European sales had increased as expected, but margins had dropped, as well as synergies between the acquired companies were not working as expected. In addition, one of Scotts Europe’s largest customers was threatening to leave due to unacceptable service levels that might cause a domino effect to other large customers.
Given the current environment shows how the strength and broad appeal of the Sainsbury's brand has improved substantially during the past four years. Like-for-like sales growth, excluding fuel, of 4.3 per cent over the summer quarter and 3.9 per cent for the first half,
The food and staples retailing is an increasingly competitive industry. The market giants (competitors) are Coles (owned by Wesfarmers) which has 741 stores across Australia and plans to add 70 m...
Big rivals such as Tesco and Morrisons started to compete in price by shrinking packages, introducing cheaper equivalent products, or using cheaper ingredients. Although these strategies cause a sluggish revenue increase, it works on boosting sales and market shares. For example, Tesco’s sale grew by 2.2 percent during July to September. Apart from the traditional retailers, Aldi who applies a similar discounter model is also a strong competitor. In 16th July, the market share of Aldi was 6.2% while Lidl occupied 4.6% of the market (Gale,2016) Compared to Lidl, Aldi has a more dominant market position and better corporate with local farmers. To stand out from these rivals, Lidl still has a long way to go.
Sainsburys Analysis and Recommendations Management Styles There are three main types of management styles. These are autocratic, consultative and democratic. Autocratic ---------- The autocratic management style is one where the manager is used to give instructions.