VICTORYSUPERMARKETS
AGENDA
KEY ISSUES
STRATEGIC
OPPORTUNITY
COMPETITOR ANALYSIS
FINANCIALS
RECOMMENDATION
Key Issues
Changing supermarket landscape

Preference for home meal replacements

Increased margins carried by food court
Problem Identification
Challenges

Strategic
objectives

Recommendation

Project
kick-off

Dependence
on
distributor

1.5 ...
STRATEGIC OPPORTUNITIES
EXPAND

• Conventional
Stores

1.Option

NOT TO EXPAND

2.Option
• Market
Square
concept
COMPETITOR ANALYSIS
SALES
REVENUES,
bln.
$6

$2

SHAW’S
PRICE
CHOPPERS

$0.3
VICTORY

18%

30%

40%

MARKET SHARE
NET SALES
16

- Marlboro break
even at 9mln.
Sales
- Kingston break
even at 10 mln.
sales

14
12
10

Marlboro,mln.
Kingsto...
NET INCOME BEFORE DEPRECIATION
2000

1500

1000
Marlboro,thousands
Kingston,thousands
500

0
1996
-500

1997

1998

1999

...
TOTAL COSTS
Market Square

- Increased
overhead, payroll
costs

Conventional
Stores

- Training costs
14 mln.

22 mln.
Conventional vs. Market Square stores

Marlboro
• NPV:
$240.000
• PP: 4.14

Kingston
• NPV:
$995.000
• PP: 4.11

Twin city...
Assumptions:
- Marlboro is representative
for Conventional stores
- Kingston is representative
for Market Square
Capital b...
MARKET PENETRATION

Bipolar customers
Not price sensitive
customers
Quality customers
Sanitation sensitive
customers
RECOMMENDATION
Challenges

Strategic
objectives

Recommendation

Project
kick-off

Dependence
on
distributor

1.5 bln.
Ann...
THANKYOU
FOR YOUR ATTENTION
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Victory Supermarkets

  1. 1. VICTORYSUPERMARKETS
  2. 2. AGENDA KEY ISSUES STRATEGIC OPPORTUNITY COMPETITOR ANALYSIS FINANCIALS RECOMMENDATION
  3. 3. Key Issues Changing supermarket landscape Preference for home meal replacements Increased margins carried by food court
  4. 4. Problem Identification Challenges Strategic objectives Recommendation Project kick-off Dependence on distributor 1.5 bln. Annual sales ? 1996 Short-term financing Minimize dependency on Fleet Partnership with Supervalu 1999
  5. 5. STRATEGIC OPPORTUNITIES EXPAND • Conventional Stores 1.Option NOT TO EXPAND 2.Option • Market Square concept
  6. 6. COMPETITOR ANALYSIS SALES REVENUES, bln. $6 $2 SHAW’S PRICE CHOPPERS $0.3 VICTORY 18% 30% 40% MARKET SHARE
  7. 7. NET SALES 16 - Marlboro break even at 9mln. Sales - Kingston break even at 10 mln. sales 14 12 10 Marlboro,mln. Kingston,mln. 8 6 4 2 0 1996 1997 1998 1999 2000 2001
  8. 8. NET INCOME BEFORE DEPRECIATION 2000 1500 1000 Marlboro,thousands Kingston,thousands 500 0 1996 -500 1997 1998 1999 2000 2001
  9. 9. TOTAL COSTS Market Square - Increased overhead, payroll costs Conventional Stores - Training costs 14 mln. 22 mln.
  10. 10. Conventional vs. Market Square stores Marlboro • NPV: $240.000 • PP: 4.14 Kingston • NPV: $995.000 • PP: 4.11 Twin city • NPV: $167.000 • PP: 5
  11. 11. Assumptions: - Marlboro is representative for Conventional stores - Kingston is representative for Market Square Capital by Supervalu: $100mln. NPV in millions INVESTMENT APPRAISAL $ 2.5 $ !.7 0 Conventional Stores Market Square stores
  12. 12. MARKET PENETRATION Bipolar customers Not price sensitive customers Quality customers Sanitation sensitive customers
  13. 13. RECOMMENDATION Challenges Strategic objectives Recommendation Project kick-off Dependence on distributor 1.5 bln. Annual sales MARKET NPV: $2.5 mln. SQUARE PP: 4.11 1996 Short-term financing Minimize dependency on Fleet Partnership with Supervalu 1999
  14. 14. THANKYOU FOR YOUR ATTENTION
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