Analysis for supermarket industry by sampling from publicly trading company 2013 10K financial data.

1. Competitors Analysis –
Supermarket
Howard Wang, CPA

2. $600 billion U.S. supermarket industry
• Intensely competitive segment - conventional,
supercenter, natural/gourmet, limited assortment and
warehouse.
• Conventional supermarkets have experienced overall
share decline from approximately 73% in 2005 to 67% in
2012, according to the Progressive Grocer.
• An increasing consumer focus on healthy, fresh and
quality offerings as well as organic and conventional
offerings.
• An increasing consumer interest in locally-grown
products including regionally and locally sourced food.

3. Public Trading Companies in Supermarket business
• Village Super Market operates a chain of 29 supermarkets under the
ShopRite name in New Jersey, Maryland and eastern Pennsylvania.
• Fresh Market is a fast-growing specialty retailer focused on creating an
extraordinary food shopping experience and operated 151 stores in 26 states
across the United States.
• Sprouts is a high-growth, natural and organic food retailer offering a
complete grocery shopping experience and operating 167 stores in eight
states.
• Ingles operated 194 supermarkets under the name “Ingles,” and 9
supermarkets under the name “Sav-Mor” with locations in western North
Carolina, western South Carolina, northern Georgia, eastern Tennessee,
southwestern Virginia and Northeastern Alabama.
• Safeway Inc. is one of the largest food and drug retailers in the United States,
with 1,335 stores at year-end 2013. The Company’s U.S. retail operations are
located principally in California, Hawaii, Oregon, Washington, Alaska,
Colorado, Arizona, Texas and the Mid-Atlantic region.

4. Revenue Trend
• No significant
growth in big guys.
• Sprouts opened 22
and 16 stores in 2013
and 2012.
• Fresh Market
opened 19 and 9
stores in 2013 and
2012 respectively.
• Village acquired 1
store in 2012.
$36,139,100 $3,738,540
$2,437,911
$1,511,657 $1,476,457
$36,068,300 $3,718,315
$1,794,823
$1,329,131 $1,422,243
$35,356,700 $3,569,023
$1,105,879
$1,108,035 $1,298,928
0%
20%
40%
60%
80%
100%
Safeway Ingles Sprouts Fresh Market Village
REVENUE 3-YEAR STACKED ($’000)
2013 2012 2011
1335
203 167 151
29
1346
203
148 129
29
1377
203
103 113
28
0
200
400
600
800
1000
1200
1400
1600
Safeway Ingles Sprouts Fresh Market Village
Number of stores (2011 - 2013)
2013 2012 2011

5. Sales Per Store
• 2012 higher growth is due
to the economic recovery.
• Sprouts growth driven
from the demand for
healthier food choices and
same-store private label
sales growth.
• Sprouts and Fresh
Markets operate a smaller
than other peers’ average
stores.
10.70%
2.9%
2.1%
1.02%
0.60%
9.70%
4.9%
4.6% 4.36%
5.54%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
Sprouts Village Fresh Market Safeway Ingles
Sales increase % - Same Store
2013 2012
Village, 56,690
Ingles, 54,562
Safeway, 47,491
Sprouts, 27,442
Fresh Market,
21,123
Total square feet per store

6. Store Performance
$50,912
$27,070
$17,728
$14,598
$10,798
$49,043
$26,797
$17,623
$12,127 $10,985
$46,390
$25,677
$16,698
$10,737 $9,806
$-
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
Village Safeway Ingles Sprouts Fresh Market
Sales Per Store (in thousand) 2013 2012 2011
• Village has the highest
square feet and sales per
store were 56,600 sq. ft.
and $50,912 are among the
highest in the
supermarket industry.
• Larger store sizes enable
Village to offer the
specialty departments
including pharmacies,
natural and organic
departments, ethnic and
international foods, and
home meal replacement.
$1,140
$570
$535 $532
$465
$1,118
$565
$524
$442 $464
$1,003
$543
$501
$406 $437
$-
$200
$400
$600
$800
$1,000
$1,200
Village Safeway Fresh Market Sprouts Ingles
Comparable Sales per square feet
2013 2012 2011

7. Profitability • Gross margin has
less than 1% changes
over the years.
• Sprouts improved
the income of
operations to 5.7%
from 3.9% due a $17.1
million decrease in
acquisition and
integration costs.
• Fresh Market has
lower income from
operation % due the
higher
compensation at the
new open stores.
34.1%
29.7%
26.9% 26.3%
22.1%
34.0%
29.5%
27.3% 26.2%
22.1%
33.1%
28.1% 27.0% 26.8%
22.2%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
40.00%
Fresh Market Sprouts Village Safeway Ingles
Gross margin % 2013 2012 2011
5.5% 5.7%
3.0%
1.8%
3.2%
7.6%
3.9% 3.9%
2.0%
3.3%
7.5%
-2.3%
2.9%
2.0%
3.2%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
Fresh Market Sprouts Village Safeway Ingles
Income from operation as % of Sales
2013 2012 2011

8. Profitability
• EBITDA % range from
4.3% to 9.1% in 2013.
• Fresh Market EBITDA
% decreased by 2%
due to impairment
charges, and higher
SG&A, partially offset
by improved gross
margin.
• Ingles EBITDA %
decreased by 1.1% due
to the higher
compensations of
higher sales volume
and new distribution
facility opened.
$1,552,900
$168,484 $138,259
$68,764
$180,273
$1,699,500
$29,282 $119,576 $59,144
$208,094
$0
$500,000
$1,000,000
$1,500,000
$2,000,000
Safeway Sprouts Fresh Market Village Ingles
EBITDA in thousand (3-year comparison)
2013 2012 2011
4.3%
6.9%
9.1%
4.7% 4.8%4.7%
5.9%
11.1%
5.5%
5.9%
4.8%
2.6%
10.8%
4.6%
5.8%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Safeway Sprouts Fresh Market Village Ingles
EBITDA as % of Sales
2013 2012 2011

9. Capital Expenditure & Debt
• Fresh Market has
the highest
CAPEX% among
the competitors.
• Ingles has the
negative FCF in
2012 since a new
distribution
facility and
renovation of
stores.
• Fresh Market has
the lower FCF after
higher CAPEX %.
8.1%
3.6%
2.7%
2.1%
1.5%
6.1%
2.6%
4.9%
2.3%
1.5%
7.9%
2.5% 2.7% 2.8%
1.5%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Fresh Market Sprouts Ingles Safeway Village
CAPEX as % of Sales
2013 2012 2011
$18,006
$29,385 $43,748
$73,125
$476,700
$20,998 $44,203 $(278) $24,790
$1,031,200
$(200,000)
$-
$200,000
$400,000
$600,000
$800,000
$1,000,000
$1,200,000
Fresh Market Village Ingles Sprouts Safeway
Free Cash Flow
2013 2012 2011

10. DIO & DSO • Ingles offering a
broad array of
products and
currently supplies
approximately 56% of
its supermarkets’
inventory from its
warehouse and
distribution facilities,
thus, it has the longer
DIO.
• Safeway has the
higher DSO due to
the gift card
receivable and
pharmacy business.
13.9
18.3
23.1
31.9
41.3
14.0
17.0
23.4
34.5
39.9
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
Village Fresh Market Sprouts Safeway Ingles
Days Inventory Outstanding (DIO)
2013 2012
1.3
2.2
2.8
5.9
10.7
1.2
1.6
2.5
5.8
7.9
0.0
2.0
4.0
6.0
8.0
10.0
12.0
Sprouts Fresh Market Village Ingles Safeway
Days Sales Outstanding (DSO)
2013 2012

11. CCC=DIO+DSO-DPO
 Village holds an
investment in Wakefern,
its principal supplier.
Village purchases
substantially all of its
merchandise from
Wakefern in accordance
with the Wakefern
Stockholder Agreement.
Thus, a lower inventory
and higher A/P resulted
in a negative CCC.
 Safeway has higher DIO
but also has higher DPO,
which resulted in a very
short CCC.
(2.8) …
3.8
5.3
27.0
(3.1)
1.0
4.9
3.9
24.9
(5.0)
-
5.0
10.0
15.0
20.0
25.0
30.0
Village Safeway Sprouts Fresh Market Ingles
Cash Conversion Cycle (CCC)
2013 2012
15.1
19.4 20.3 20.7
44.5
14.6
19.6 20.8 19.7
41.4
-
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
50.0
Fresh Market Village Ingles Sprouts Safeway
Days Payable Outstanding (DPO)
2013 2012

12. Earning Growth Strategy
• Expand store base –
replicating successful store to
new store or acquisition,
remodeling the existing stores
• Drive comparable store sales –
new and creative
products/private label brand
• Improve operating margin –
efficiency on the process of
operation and
finance/accounting
Earning
Growth
Store
base
ProcessProducts