The document provides an analysis of Costco Wholesale's recent performance and outlook. It summarizes that Costco reported strong same-store sales growth of 7-8% during the first four months of 2008 despite challenging economic conditions. Channel checks found Costco's local traffic held up well while other retailers saw weakness. The document maintains a positive long-term view of Costco given its consistent growth, strong membership renewal rates, and expansion plans to double its store count over 10 years. In the near term, the stock appears fully valued based on earnings estimates.
The document discusses the cola wars between Coca-Cola and Pepsi from 1970 to 2010. It describes how consumption of carbonated soft drinks grew steadily at 3% annually from 1970 to 2000 due to increasing availability, new diet and flavored varieties, and declining prices. While Coca-Cola and Pepsi dominated the cola segment, their market share has declined in recent years as consumers have shifted to healthier beverage alternatives like water, juice, and sports drinks. Both companies have adapted by expanding their product portfolios internationally and acquiring companies in the snack and beverage industries to sustain profits in the face of flattening carbonated soft drink demand.
HBR Case Study of Launching Krispy NaturalPranshu Gupta
This document summarizes a case study about Pemberton Enterprises, a multinational snack and beverage company. Pemberton is analyzing test market results for its new product "Krispy Natural" crackers before a wider launch. In Columbus, Ohio, Krispy Natural significantly outperformed expectations by doubling its market share target. However, in southeastern cities where Krispy previously failed, the results were less impressive with little category growth. The contradictory results may be due to differences in prior brand perception and retailer promotional support between the regions. Pemberton must interpret these mixed results and determine the best marketing strategy for introducing Krispy Natural more broadly.
Costco Wholesale Corporation is a wholesale retailer headquartered in Washington. The document analyzes Costco's 2012 fiscal year financial statements and performance. It finds that Costco has a strong balance sheet with over $13 billion in total assets, including $7 billion in inventory and $3.5 billion in cash. Costco has stable profitability with a gross profit margin around 13% and net income of $1.7 billion in 2012. The document concludes that Costco has effective internal controls and generates sufficient cash flow to fund operations and expansion.
Applichem case discusses about Supply Chain issues related to Market fluctuations in exchange rate and an optimal SC model for a Global setup. In this presentation, our group has analyzed the optimal solution through simplex LP and checked its robustness in event of market exchange rate fluctuations.
The document discusses Walmart's efforts to compete with Amazon in online retail. It provides an overview of Walmart and Amazon's business models, Porter's five forces analysis, strategic acquisitions timeline, SWOT analysis, value chains, change processes, modular architecture, multi-sided platforms, and financial analysis. It analyzes how Walmart can leverage its strengths in grocery retail and supply chain to grow its online business and diversify beyond grocery to maintain competitive advantage against Amazon.
AllRound is a pharmaceutical company that produces a 4-hour multi-symptom cold liquid. This marketing plan outlines AllRound's marketing strategy and tactics for the coming year. It includes a situational analysis of AllRound's competitive environment and target markets. The plan sets objectives to increase sales, improve new product awareness, and maintain brand loyalty. AllRound's strategy is integrative growth by potentially acquiring suppliers, wholesalers, or competitors. Tactics include penetrating new markets like cough and allergy while maintaining the core cold liquid product. Financial projections estimate a break-even point of 102,100 units based on costs and unit price.
Coca-Cola implemented smart vending machines that would automatically adjust drink prices based on outside temperature, with prices higher when it was hot out. However, this strategy backfired with customers as they did not see additional value from the temperature-adjusted pricing and felt the company was unjustly charging more without explanation. While differentiated pricing can work in some contexts, Coca-Cola's approach was not accepted by consumers for this popular staple product sold from vending machines.
Winning PharmaSim Marketing Game StrategyLaura Winger
With a symphony of heavy data mining and simulation, my team was able to beat the competition (teams of fellow classmates) with no spending on pricey market research reports in this marketing game.
The document discusses the cola wars between Coca-Cola and Pepsi from 1970 to 2010. It describes how consumption of carbonated soft drinks grew steadily at 3% annually from 1970 to 2000 due to increasing availability, new diet and flavored varieties, and declining prices. While Coca-Cola and Pepsi dominated the cola segment, their market share has declined in recent years as consumers have shifted to healthier beverage alternatives like water, juice, and sports drinks. Both companies have adapted by expanding their product portfolios internationally and acquiring companies in the snack and beverage industries to sustain profits in the face of flattening carbonated soft drink demand.
HBR Case Study of Launching Krispy NaturalPranshu Gupta
This document summarizes a case study about Pemberton Enterprises, a multinational snack and beverage company. Pemberton is analyzing test market results for its new product "Krispy Natural" crackers before a wider launch. In Columbus, Ohio, Krispy Natural significantly outperformed expectations by doubling its market share target. However, in southeastern cities where Krispy previously failed, the results were less impressive with little category growth. The contradictory results may be due to differences in prior brand perception and retailer promotional support between the regions. Pemberton must interpret these mixed results and determine the best marketing strategy for introducing Krispy Natural more broadly.
Costco Wholesale Corporation is a wholesale retailer headquartered in Washington. The document analyzes Costco's 2012 fiscal year financial statements and performance. It finds that Costco has a strong balance sheet with over $13 billion in total assets, including $7 billion in inventory and $3.5 billion in cash. Costco has stable profitability with a gross profit margin around 13% and net income of $1.7 billion in 2012. The document concludes that Costco has effective internal controls and generates sufficient cash flow to fund operations and expansion.
Applichem case discusses about Supply Chain issues related to Market fluctuations in exchange rate and an optimal SC model for a Global setup. In this presentation, our group has analyzed the optimal solution through simplex LP and checked its robustness in event of market exchange rate fluctuations.
The document discusses Walmart's efforts to compete with Amazon in online retail. It provides an overview of Walmart and Amazon's business models, Porter's five forces analysis, strategic acquisitions timeline, SWOT analysis, value chains, change processes, modular architecture, multi-sided platforms, and financial analysis. It analyzes how Walmart can leverage its strengths in grocery retail and supply chain to grow its online business and diversify beyond grocery to maintain competitive advantage against Amazon.
AllRound is a pharmaceutical company that produces a 4-hour multi-symptom cold liquid. This marketing plan outlines AllRound's marketing strategy and tactics for the coming year. It includes a situational analysis of AllRound's competitive environment and target markets. The plan sets objectives to increase sales, improve new product awareness, and maintain brand loyalty. AllRound's strategy is integrative growth by potentially acquiring suppliers, wholesalers, or competitors. Tactics include penetrating new markets like cough and allergy while maintaining the core cold liquid product. Financial projections estimate a break-even point of 102,100 units based on costs and unit price.
Coca-Cola implemented smart vending machines that would automatically adjust drink prices based on outside temperature, with prices higher when it was hot out. However, this strategy backfired with customers as they did not see additional value from the temperature-adjusted pricing and felt the company was unjustly charging more without explanation. While differentiated pricing can work in some contexts, Coca-Cola's approach was not accepted by consumers for this popular staple product sold from vending machines.
Winning PharmaSim Marketing Game StrategyLaura Winger
With a symphony of heavy data mining and simulation, my team was able to beat the competition (teams of fellow classmates) with no spending on pricey market research reports in this marketing game.
The document discusses Dore Dore, a manufacturer of knitted products. It had two divisions: hosiery and knitwear. The hosiery division faced problems with uncertain forecasts leading to high inventory costs and unsold items. It wanted to implement a cellular design process to improve production. Testing this in the knitwear division showed lower WIP inventory and fewer bins per worker. In the hosiery division, designing the process layout as per work tasks identified two work stations needed. However, the factory machine utilization was only 58%, indicating heavy depreciation costs due to idle machines. Alternatives were needed to improve efficiency.
This was a group project which was created by myself, Alicia Lo, Lei Lei, Kevin Bernaga, Joanna Nguyen, and BInbin Li in which we created an in-depth case analysis report on the Costco Wholesale company. In this project, we effectively analyzed Costco’s sources of competitive advantage, core competencies, and strategic issues and conducted an internal/external environment analysis, PESTLE analysis, and strategic analysis in order to create strategic recommendations for Costco to follow. We further reinforced strategic recommendations using statistical graphs regarding Costco’s revenues, expenditures, etc.
This project was conducted during our BUS-690 (Business Policy and Strategic Management) course at San Francisco State University.
Analysis of Best Buy mini case from Kotler's Marketing Management textbook.
This presentation was created by Sarthak Anand, IET Lucknow during a Marketing internship under Prof. Sameer Mathur, IIM Lucknow.
Global Supply Simulation Presentation - Team 14oenterprises
The document summarizes a team's decisions and results from a global supply chain simulation. The team selected options based on profitability and forecasting risks. Initial production levels were set using average forecasts and supplier capabilities. A dual supplier strategy was used - one overseas for low cost and one local for flexibility. Change orders were issued sparingly to the local supplier to better meet demand revealed by a $2 million Celldex investment. Advice for future teams includes effective supplier selection and change order issuance, and starting with lower inventory levels for flexibility. The team's presentation on their simulation results concluded.
Becker Textilwerk Gmbh es una empresa alemana líder en la fabricación de fibras textiles con ventas anuales de 1,200 millones de euros. La empresa recibió una solicitud de un cliente para un descuento adicional. Becker debe decidir si acepta o rechaza la solicitud considerando su posición de liderazgo en el mercado, su enfoque en la diferenciación de productos y su sistema de costos variables. El análisis del margen de contribución será clave para tomar la mejor decisión.
Interco case by deepak gupta & gruop.deepak gupta
The document provides an analysis of Interco's financial performance in 1987-1988 and reasons for a hostile takeover attempt. Key points include:
- Interco had strong current and quick ratios, indicating good short-term financial health.
- Returns on equity were around 10-11%, showing decent returns for shareholders.
- Two of Interco's business divisions were unprofitable, weighing down overall performance.
- The hostile takeover by City Capital aims to divest these weak units and make Interco profitable again.
1) The document analyzes the fuel station forecasting and inventory management practices of Agarwal Automobiles, an authorized fuel station in India.
2) It identifies weaknesses in the current approach, which does not use formal analytical techniques for ordering and inventory policies.
3) Recommendations include developing a forecasting model and inventory management system to increase efficiency and profits.
The soft drink concentrate business is highly profitable due to low costs of production and barriers to entry. Concentrate producers require only $25-50 million for a plant that can serve the entire US market. They face little threat from new entrants due to patented formulas and brand equity built over decades of marketing. In contrast, bottlers face higher costs, more competition, and lower profits of around 35% due to factors like needing large capital investments for plants. However, Coke and Pepsi have been able to sustain profits through brand loyalty, expanding into new markets like juices, and leveraging their brand equity globally despite slowing carbonated drink demand.
Should kroger pay now for what ralphs employee did thenTairos Sman
Ralphs supermarket allowed a manager, Misiolek, to continue managing stores despite complaints of sexual harassment starting in 1985. In 1996, six women sued Ralphs for harassment by Misiolek. In 1998, Kroger acquired Ralphs. The judge argued Kroger should not be fully responsible for events before the acquisition. However, through acquiring Ralphs, Kroger took on its responsibilities and liabilities. Companies need strong policies to address harassment complaints and prevent situations like this. They must take responsibility for upholding ethical standards and protecting employees.
Team E achieved a cumulative ROI of 6.4%, generated $1.276 billion in revenues through sales of 3029 units, and increased their market share to 19.3%, resulting in a $728 thousand contribution after marketing and a stock price index of 3623. Their strong financial performance was driven by growing market share and revenues while maintaining high returns on investment.
Global supply chain case study team8_submit v2Meghan Histand
The team selected design options and suppliers that balanced low production costs with flexibility. They split production between overseas and domestic suppliers. For forecasting, they averaged all forecasts rather than following the consensus. They set initial production slightly above forecasts and issued change orders when costs outweighed $2M adjustment fees. Investing in market research helped inform change orders. Overall, balancing costs and flexibility along with responsiveness to new data worked well.
The document discusses Sports Obermeyer, a skiwear manufacturer founded in 1947. It provides details on the company's structure, sales figures, market share, and a joint venture called Obersport.
It then presents a sample problem asking how many units of each style Wally Obermeyer should order from its Hong Kong production. Using forecasting data and calculations, it recommends production quantities for 10 styles that meet the minimum order of 10,000 units.
Recommendations are made to improve Obermeyer's forecasting accuracy, reduce lead times, increase Chinese worker efficiency, and source non-standard zippers closer to reduce lead times. Long-term, shifting more production to Hong Kong is suggested due to lead
AmazonFresh is a grocery delivery service owned by Amazon that is available in some US states, London, Tokyo, Berlin, Hamburg, and Munich. It offers same-day or next-day delivery of grocery items from its stores. While online grocery faced challenges after the failures of Webvan and HomeGrocer, AmazonFresh aimed to address issues like long lead times, the need for its own logistics infrastructure, and customer density through solutions like owning warehouses and delivery fleets. It focused on expanding conveniently while refining its business model and expanding carefully to a second major city.
The document outlines the strategies and results of managing the pharmaceutical company Allstar in the PharmaSim simulation. It discusses Allstar's objectives to earn the highest net income, stock price, market share, and manufacturer sales. Through adjusting prices, increasing sales forces, promoting products, and launching new products, Allstar was able to become the market leader and earn the highest net income and market share. Key lessons learned include understanding product nature, adapting strategies, and realizing limitations of the simulation.
Walmart is the largest global retailer founded in 1962. It operates in 16 countries with over 11,000 stores worldwide. Walmart faces challenges from market saturation and criticism over social issues. However, its strategies of cost leadership through supply chain efficiency and internalization to new markets have contributed to its success. Going forward, Walmart could consider fine-tuning its business strategies, continuing internalization with better approaches, and refreshing its supply chain strategies.
Goodyear: The Aquatred Launch : Harvard Case AnalysisSameer Mathur
- Five tire companies once dominated the US tire market but faced decline due to foreign competition and rising costs. Radial tires with increased mileage replaced bias tires in the 1970s and 1980s.
- The document discusses the US tire market in the 1990s, noting increased average mileage per tire, lower prices due to overcapacity, and consumers' lack of brand loyalty. It profiles Goodyear as the only remaining US company and discusses its new Aquatred tire.
- Goodyear launched the Aquatred, positioned as an innovative radial tire with best-in-class wet traction and a 60,000 mile warranty. It was priced competitively at $89.95-$93.95 and marketed toward safety
The marketing plan highlights the 4 P's of marketing - product, price, place, and promotion. The initial objectives are to determine the appropriate target market for each product, focus advertising on benefits rather than comparisons, and be perceived as a high-end product at a reasonable price. The goals are to become a leading competitor in the cold, cough, and allergy markets and solidify market share in rounds 1 and 2. A comparison of rounds 1 and 2 shows that round 2 had higher net income due to higher prices and lower volume discounts, though round 1 had a larger share of retail sales and stock price due to different advertising messages. Lessons learned include understanding pricing impacts, the importance of brand positioning through promotions and advertising,
Avant garde wealth mgmt - Quarterly letter - 1306Gaurav Jalan
The document summarizes the analysis of a basket of 251 Indian consumer companies by Avant Garde Wealth Management. It finds that while consumer stocks have strong earnings growth and return on equity, their valuations are currently at historic highs relative to earnings. Historically, high valuations for consumer stocks have coincided with weaker future returns despite ongoing earnings growth. The document also discusses the impact of the US Federal Reserve's comments about tapering quantitative easing, which caused short-term turmoil in global asset markets. It questions whether the Fed will actually be able to normalize monetary policy and raise interest rates given its enormous balance sheet.
1) The document provides a sell recommendation for Staples Inc. (SPLS) stock with a target price of $13.45, an 18.4% downside from the current price.
2) Staples faces challenges from shifting consumer demand away from office supplies, competition from online retailers, and potential new entrants.
3) A discounted cash flow valuation model estimates Staples' equity value at $8.6 billion and a share price of $13.45, sensitive to assumptions about costs, expenses, and long-term growth.
The document discusses Dore Dore, a manufacturer of knitted products. It had two divisions: hosiery and knitwear. The hosiery division faced problems with uncertain forecasts leading to high inventory costs and unsold items. It wanted to implement a cellular design process to improve production. Testing this in the knitwear division showed lower WIP inventory and fewer bins per worker. In the hosiery division, designing the process layout as per work tasks identified two work stations needed. However, the factory machine utilization was only 58%, indicating heavy depreciation costs due to idle machines. Alternatives were needed to improve efficiency.
This was a group project which was created by myself, Alicia Lo, Lei Lei, Kevin Bernaga, Joanna Nguyen, and BInbin Li in which we created an in-depth case analysis report on the Costco Wholesale company. In this project, we effectively analyzed Costco’s sources of competitive advantage, core competencies, and strategic issues and conducted an internal/external environment analysis, PESTLE analysis, and strategic analysis in order to create strategic recommendations for Costco to follow. We further reinforced strategic recommendations using statistical graphs regarding Costco’s revenues, expenditures, etc.
This project was conducted during our BUS-690 (Business Policy and Strategic Management) course at San Francisco State University.
Analysis of Best Buy mini case from Kotler's Marketing Management textbook.
This presentation was created by Sarthak Anand, IET Lucknow during a Marketing internship under Prof. Sameer Mathur, IIM Lucknow.
Global Supply Simulation Presentation - Team 14oenterprises
The document summarizes a team's decisions and results from a global supply chain simulation. The team selected options based on profitability and forecasting risks. Initial production levels were set using average forecasts and supplier capabilities. A dual supplier strategy was used - one overseas for low cost and one local for flexibility. Change orders were issued sparingly to the local supplier to better meet demand revealed by a $2 million Celldex investment. Advice for future teams includes effective supplier selection and change order issuance, and starting with lower inventory levels for flexibility. The team's presentation on their simulation results concluded.
Becker Textilwerk Gmbh es una empresa alemana líder en la fabricación de fibras textiles con ventas anuales de 1,200 millones de euros. La empresa recibió una solicitud de un cliente para un descuento adicional. Becker debe decidir si acepta o rechaza la solicitud considerando su posición de liderazgo en el mercado, su enfoque en la diferenciación de productos y su sistema de costos variables. El análisis del margen de contribución será clave para tomar la mejor decisión.
Interco case by deepak gupta & gruop.deepak gupta
The document provides an analysis of Interco's financial performance in 1987-1988 and reasons for a hostile takeover attempt. Key points include:
- Interco had strong current and quick ratios, indicating good short-term financial health.
- Returns on equity were around 10-11%, showing decent returns for shareholders.
- Two of Interco's business divisions were unprofitable, weighing down overall performance.
- The hostile takeover by City Capital aims to divest these weak units and make Interco profitable again.
1) The document analyzes the fuel station forecasting and inventory management practices of Agarwal Automobiles, an authorized fuel station in India.
2) It identifies weaknesses in the current approach, which does not use formal analytical techniques for ordering and inventory policies.
3) Recommendations include developing a forecasting model and inventory management system to increase efficiency and profits.
The soft drink concentrate business is highly profitable due to low costs of production and barriers to entry. Concentrate producers require only $25-50 million for a plant that can serve the entire US market. They face little threat from new entrants due to patented formulas and brand equity built over decades of marketing. In contrast, bottlers face higher costs, more competition, and lower profits of around 35% due to factors like needing large capital investments for plants. However, Coke and Pepsi have been able to sustain profits through brand loyalty, expanding into new markets like juices, and leveraging their brand equity globally despite slowing carbonated drink demand.
Should kroger pay now for what ralphs employee did thenTairos Sman
Ralphs supermarket allowed a manager, Misiolek, to continue managing stores despite complaints of sexual harassment starting in 1985. In 1996, six women sued Ralphs for harassment by Misiolek. In 1998, Kroger acquired Ralphs. The judge argued Kroger should not be fully responsible for events before the acquisition. However, through acquiring Ralphs, Kroger took on its responsibilities and liabilities. Companies need strong policies to address harassment complaints and prevent situations like this. They must take responsibility for upholding ethical standards and protecting employees.
Team E achieved a cumulative ROI of 6.4%, generated $1.276 billion in revenues through sales of 3029 units, and increased their market share to 19.3%, resulting in a $728 thousand contribution after marketing and a stock price index of 3623. Their strong financial performance was driven by growing market share and revenues while maintaining high returns on investment.
Global supply chain case study team8_submit v2Meghan Histand
The team selected design options and suppliers that balanced low production costs with flexibility. They split production between overseas and domestic suppliers. For forecasting, they averaged all forecasts rather than following the consensus. They set initial production slightly above forecasts and issued change orders when costs outweighed $2M adjustment fees. Investing in market research helped inform change orders. Overall, balancing costs and flexibility along with responsiveness to new data worked well.
The document discusses Sports Obermeyer, a skiwear manufacturer founded in 1947. It provides details on the company's structure, sales figures, market share, and a joint venture called Obersport.
It then presents a sample problem asking how many units of each style Wally Obermeyer should order from its Hong Kong production. Using forecasting data and calculations, it recommends production quantities for 10 styles that meet the minimum order of 10,000 units.
Recommendations are made to improve Obermeyer's forecasting accuracy, reduce lead times, increase Chinese worker efficiency, and source non-standard zippers closer to reduce lead times. Long-term, shifting more production to Hong Kong is suggested due to lead
AmazonFresh is a grocery delivery service owned by Amazon that is available in some US states, London, Tokyo, Berlin, Hamburg, and Munich. It offers same-day or next-day delivery of grocery items from its stores. While online grocery faced challenges after the failures of Webvan and HomeGrocer, AmazonFresh aimed to address issues like long lead times, the need for its own logistics infrastructure, and customer density through solutions like owning warehouses and delivery fleets. It focused on expanding conveniently while refining its business model and expanding carefully to a second major city.
The document outlines the strategies and results of managing the pharmaceutical company Allstar in the PharmaSim simulation. It discusses Allstar's objectives to earn the highest net income, stock price, market share, and manufacturer sales. Through adjusting prices, increasing sales forces, promoting products, and launching new products, Allstar was able to become the market leader and earn the highest net income and market share. Key lessons learned include understanding product nature, adapting strategies, and realizing limitations of the simulation.
Walmart is the largest global retailer founded in 1962. It operates in 16 countries with over 11,000 stores worldwide. Walmart faces challenges from market saturation and criticism over social issues. However, its strategies of cost leadership through supply chain efficiency and internalization to new markets have contributed to its success. Going forward, Walmart could consider fine-tuning its business strategies, continuing internalization with better approaches, and refreshing its supply chain strategies.
Goodyear: The Aquatred Launch : Harvard Case AnalysisSameer Mathur
- Five tire companies once dominated the US tire market but faced decline due to foreign competition and rising costs. Radial tires with increased mileage replaced bias tires in the 1970s and 1980s.
- The document discusses the US tire market in the 1990s, noting increased average mileage per tire, lower prices due to overcapacity, and consumers' lack of brand loyalty. It profiles Goodyear as the only remaining US company and discusses its new Aquatred tire.
- Goodyear launched the Aquatred, positioned as an innovative radial tire with best-in-class wet traction and a 60,000 mile warranty. It was priced competitively at $89.95-$93.95 and marketed toward safety
The marketing plan highlights the 4 P's of marketing - product, price, place, and promotion. The initial objectives are to determine the appropriate target market for each product, focus advertising on benefits rather than comparisons, and be perceived as a high-end product at a reasonable price. The goals are to become a leading competitor in the cold, cough, and allergy markets and solidify market share in rounds 1 and 2. A comparison of rounds 1 and 2 shows that round 2 had higher net income due to higher prices and lower volume discounts, though round 1 had a larger share of retail sales and stock price due to different advertising messages. Lessons learned include understanding pricing impacts, the importance of brand positioning through promotions and advertising,
Avant garde wealth mgmt - Quarterly letter - 1306Gaurav Jalan
The document summarizes the analysis of a basket of 251 Indian consumer companies by Avant Garde Wealth Management. It finds that while consumer stocks have strong earnings growth and return on equity, their valuations are currently at historic highs relative to earnings. Historically, high valuations for consumer stocks have coincided with weaker future returns despite ongoing earnings growth. The document also discusses the impact of the US Federal Reserve's comments about tapering quantitative easing, which caused short-term turmoil in global asset markets. It questions whether the Fed will actually be able to normalize monetary policy and raise interest rates given its enormous balance sheet.
1) The document provides a sell recommendation for Staples Inc. (SPLS) stock with a target price of $13.45, an 18.4% downside from the current price.
2) Staples faces challenges from shifting consumer demand away from office supplies, competition from online retailers, and potential new entrants.
3) A discounted cash flow valuation model estimates Staples' equity value at $8.6 billion and a share price of $13.45, sensitive to assumptions about costs, expenses, and long-term growth.
Cato Corporation is a women's apparel specialty retailer operating over 1,288 stores across the United States. While the company saw flat or declining same-store sales and revenues recently, its financial position remains stable with increasing book value, earnings per share, and margins over the long term. An analysis of Cato's financials and industry valuation suggests the stock currently trades below its estimated fair price of $44.85 per share, indicating expected returns of 63% make it undervalued.
This document provides a valuation of Costco stock using several models. It begins by calculating the discount rate using the CAPM model, determining a risk free rate of 3.75% and market risk premium of 3.1% based on economic indicators. It then estimates Costco's beta to be 0.9 based on its defensive nature and stable earnings. This yields a discount rate of 6.54%. It then provides inputs for the valuation models such as a long term growth rate of 4.75% and dividend of $1.80. The document will value Costco using the dividend discount model, capitalized earnings model, and H-model.
This business valuation report values Starbucks Corporation as of November 29, 2016 using two methods. The discounted cash flow method values Starbucks at $56.15 billion. The relative valuation method values Starbucks between $67.15-$80.86 billion based on comparable company multiples. By weighting the DCF 50% and relative values 25% each, the final fair market value is estimated to be $65.07 billion. The report also examines Starbucks' financials, industry, and capital structure to support the valuation.
Running Head: FINANCIAL ANALYSIS
1
FINANCIAL ANALYSIS
7
Financial Analysis
Students Name
Institutional Affiliation
Executive summaryThis report created from the financial statements of The Coca-Cola Company (KO) provides an analysis and evaluation of the actual and the prospective liquidity, profitability and the financial stability of the company. The methods that have been used in the analysis include trend analysis, the vertical analysis and the horizontal analysis. Also we have used certain analysis such as Quick ratio, debt ratio, and the current ratios. More calculations that have been used includes the returns on the owners equity, the earning per share, net operating working capital, total operating capital, net operating capital, net operating profit after taxes, operating cash flow and free cash flow. A result from the data reveals that, all the company ratios are above the industries averages. Comparative performance is good in the area of the liquidity, credit control and inventory management.
The report finds that the tidings for the company are positive in the near future. The major areas of weakness highlighted require further investigation and immediate action by management. The recommendations that were provided include;
· Improving the average accounts receivable collection period,
· Raising/ increasing the inventory turnover and reduction of prepayments in order to have enough operating cash for the subsequent periods.
The investigation in this report also had its shortcomings that arose and are highlighted as;
The forecasted figures used are estimates that sometimes maybe arbitrate; we also cannot fully provide data on the position of other companies with the data limitation we have experienced. The monthly details would have given us more information from which we could base a proper in year trend analysis, rather than the blanket whole year analysis provided. Though we had the above mentioned strain in preparation of this report, we still great belief that the analysis provided is best suited to show the standing of the Coca-Cola Company (KO).
In the financial report below, the strengths, weakness, opportunity and threats have been highlighted as we analyze the various financial sub segments.
Identify your company, its industry, and analyze the important segments (percentage of sales or subsidiaries) of your company compared to its industry and its overall business
The Coca-Cola Company (KO) is a multinational American Company that has its headquarters at Atlanta Georgia. The company has got its branches in more than 200 countries in the world and majority of its sales is in America, amounting to 40% of the total sales. The company operates in the non alcoholic beverage industry made up of the following companies as the main rivals, Dr Pepper Snapple Group, Inc, Nestle and Pepsi Inc. the company is the best performer in market capitalization compared to competitors with a capitalization of 169.49billion, higher .
- The Greenlight Capital funds returned 4.3% in Q3 2013, bringing the YTD return to 11.8%
- The document discusses the Federal Reserve's quantitative easing programs and questions whether they have meaningfully helped economic growth or created systemic risks
- During the quarter, the fund's long positions like Apple and Vodafone outperformed while its short positions like Chipotle struggled despite underperforming fundamentals
- Ball Corporation held its third quarter 2008 earnings conference call on October 30, 2008 to discuss financial results
- Overall performance was good, with most business segments reporting improved profitability despite difficult economic conditions
- Ball is taking actions to position itself for near and long-term growth, including plant closures, cost reductions, and focusing on demand-driven operations
- Ball Corporation held a conference call to discuss its third quarter 2008 earnings results
- Overall performance was good, with most business segments reporting improved profitability compared to Q3 2007 despite economic challenges
- Two beverage can plants will close, one in Kansas City and one in Puerto Rico, resulting in restructuring charges but expected future cost savings
- Most business segments saw higher operating earnings compared to Q3 2007, driving higher EPS
So how do you value the share price of stock for a given company? In other words, what is the intrinsic value of a given stock? Generally speaking, a stock is valued based on the company’s current financial state and what the market believes the company’s future financial state will look like. https://carnick.com/
This document provides an analysis of the Canadian asset management industry. It finds that the industry has matured but remains very profitable, with expected annual growth of around 8% driven by market performance of 6% and net sales of 2%. While industry consolidation has increased competition, the top 10 managers still control around 80% of retail assets under management. Banks have gained the most market share this decade. The document also examines trends like growth in balanced funds and segregated products, reflecting a reduced appetite for risk among retail investors. It provides ratings and price targets for several asset managers.
Coca-Cola is a global beverage company that offers over 5,000 brands in more than 200 countries. In 2013, Coca-Cola issued common stock but did not issue any convertible bonds or warrants. The document discusses various financial formulas used to determine stock and bond pricing, including the weighted average cost of capital and capital asset pricing model. It provides an example calculation of determining the price of newly issued Coca-Cola stock.
Coca-Cola is a global beverage company that offers over 5,000 brands in more than 200 countries. In 2013, Coca-Cola had annual revenues of $46 billion. The document discusses Coca-Cola's financial performance in 2013, including their issuance of common stock and valuation of bonds and stock prices. Formulas are provided to calculate the present value of bonds based on interest rates, as well as determining stock prices based on average prices and desired rate of return.
Premium Take-Private Valuation Required for a Premium Asset; Revised Cancellation Consideration to Independent Shareholders Continues to Undervalue the Business
1. The Australian equity market has increased 24% from its March low but remains below levels from three years ago. The report predicts continued bull market conditions with the All Ordinaries index reaching 3,650, implying almost 15% total returns over the next 12 months.
2. Small cap stocks have outperformed recently but now appear relatively expensive. Overall, the market appears fairly valued based on the "rule of 20" and prospective earnings yield relative to bonds.
3. The consensus view is that stronger world growth may benefit resources over banks, but the report finds resource stocks trading at higher valuations and lower yields compared to the major banks. The portfolios recommended overweight banks and include only one major miner.
- The stock market has risen 17% year-to-date but may be overextended in the short-term given lackluster business fundamentals and economic growth.
- After a potential short-term pullback, stocks could see 20-30% upside over the next year, supported by low interest rates and high liquidity.
- However, the author cautions that weak revenue growth, upcoming fiscal tightening, and downward revisions to earnings estimates could trigger a market correction from current levels.
The document provides an equity analysis and strategic options for J.M. Smucker Co. It finds that SJM is trading relatively close to its calculated value based on comparable company and discounted cash flow analyses. Three strategic options are presented: 1) Sell the underperforming International and Away From Home segment to focus resources and raise margins, 2) Merge with Conagra Brands to expand into refrigerated/frozen foods, and 3) Acquire a "better-for-you" brand to diversify the portfolio for changing consumer preferences.
This report recommends selling shares of Glacier Bancorp (GBCI) as the stock appears overvalued. The report cites Glacier's missed analyst EPS estimates in recent quarters and reliance on acquisitions to drive growth as concerns. Projections estimate Glacier will grow at a slower pace of around 4.7% annually over the next five years due to regulatory constraints and a gradually rising interest rate environment. Based on a DCF model valuing Glacier at $22.61, the current stock price of $24.36 represents an overvaluation of approximately 6.5%, leading to a recommended target price of $23 and rating of "Sell".
Mature food companies need to use aggressive cost reduction, portfolio simplification, and substantially new approaches to growth to deliver competitive returns.
Similar to Costco financial analysis may 2008 slideshare (20)
Apertor las vegas locals casino market 1aGregg Carlson
The document summarizes the outlook for the Las Vegas locals casino market, noting that:
1) Recent data and evidence suggests that optimism for a near-term recovery in the locals market is premature, as the market highly depends on the local economy which faces challenges from high unemployment, a weak housing market, and lack of job and population growth.
2) Core industry metrics like daily slot volume and win per slot have plummeted since late 2008 as the recession hit the local gaming and overall economy hard.
3) A recovery in the locals market will likely be slow and protracted given current negative trends and lack of visibility of improvements in the local economic factors that drive the market.
This document analyzes the impact of household debt and deleveraging on the US gaming industry. It finds that:
1) A significant amount of consumer spending between 2002-2007 was driven by debt and housing appreciation, fueling gaming revenue growth.
2) As households pay down debt from unprecedented levels, it is dampening discretionary consumer spending and therefore gaming industry revenues.
3) Regional gaming markets dependent on regions with high debt levels like Arizona, California and Florida have seen worse declines, while Texas's gaming markets have fared better with its lower household debt.
4) The analysis concludes that high household debt and deleveraging will continue to limit gaming industry spending growth through at
Apertor chinese lodging-industry_growthGregg Carlson
This document provides an overview and analysis of the growth of the Chinese lodging industry. Some of the key points made in the document include:
- RevPAR growth in Asia Pacific and China significantly outpaced growth in Europe and the US in 2010, with China seeing 37% year-over-year RevPAR growth.
- Major hotel companies like IHG, Marriott, and Starwood remain positive about growth prospects in Asia and China in the coming years.
- The Chinese lodging market is dominated by independent hotels and guesthouses but is seeing rapid growth of branded economy and upper-scale hotels.
- The economy hotel segment in particular has grown dramatically, led by several Chinese operators, and
Gregg Carlson report sample California LV Strip Sept 18Gregg Carlson
1) Southern California is the largest feeder market for visitors to the Las Vegas Strip, supplying around 25-30% of visitors annually between 2004-2008.
2) Historical economic trends in Southern California like GDP, employment and income have tracked closely with visitation and spending levels on the Las Vegas Strip.
3) Both the Southern California and Las Vegas Strip economies have suffered significantly during the recent recession, with most economic indicators remaining negative in 2009. A recovery is not expected until late 2010 or 2011 according to forecasts.
The document recommends buying shares of Pinnacle Entertainment (PNK) based on the following points:
1) PNK shares are trading at a valuation below their historic range and below peers, despite decent business trends.
2) Two new property openings, River City and Lumiere Place, will drive significant EBITDA growth over the next few years.
3) PNK is addressing debt covenant issues but the analyst believes they will negotiate relief given improvements in credit markets.
Gregg Carlson report sample Las Vegas Strip Ecosystem without picsGregg Carlson
The Las Vegas Strip hotel market is facing significant changes with new hotel projects opening over the next few years, increasing supply by 11%. This will likely lead to shifts in the market shares held by different hotels. Top-tier hotels like Wynn may capture more business from mid-tier hotels, creating a "waterfall effect" down the chain. Lower-tier hotels risk negative returns and cash flows as their market share declines. The geography of development also matters - the north Strip faces stalled projects and weaker performance. The future remains unclear without stronger visitor growth to match the new supply.
Discover the Future of Dogecoin with Our Comprehensive Guidance36 Crypto
Learn in-depth about Dogecoin's trajectory and stay informed with 36crypto's essential and up-to-date information about the crypto space.
Our presentation delves into Dogecoin's potential future, exploring whether it's destined to skyrocket to the moon or face a downward spiral. In addition, it highlights invaluable insights. Don't miss out on this opportunity to enhance your crypto understanding!
https://36crypto.com/the-future-of-dogecoin-how-high-can-this-cryptocurrency-reach/
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
South Dakota State University degree offer diploma Transcriptynfqplhm
办理美国SDSU毕业证书制作南达科他州立大学假文凭定制Q微168899991做SDSU留信网教留服认证海牙认证改SDSU成绩单GPA做SDSU假学位证假文凭高仿毕业证GRE代考如何申请南达科他州立大学South Dakota State University degree offer diploma Transcript
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...mayaclinic18
Whatsapp (+971581248768) Buy Abortion Pills In Dubai/ Qatar/Kuwait/Doha/Abu Dhabi/Alain/RAK City/Satwa/Al Ain/Abortion Pills For Sale In Qatar, Doha. Abu az Zuluf. Abu Thaylah. Ad Dawhah al Jadidah. Al Arish, Al Bida ash Sharqiyah, Al Ghanim, Al Ghuwariyah, Qatari, Abu Dhabi, Dubai.. WHATSAPP +971)581248768 Abortion Pills / Cytotec Tablets Available in Dubai, Sharjah, Abudhabi, Ajman, Alain, Fujeira, Ras Al Khaima, Umm Al Quwain., UAE, buy cytotec in Dubai– Where I can buy abortion pills in Dubai,+971582071918where I can buy abortion pills in Abudhabi +971)581248768 , where I can buy abortion pills in Sharjah,+97158207191 8where I can buy abortion pills in Ajman, +971)581248768 where I can buy abortion pills in Umm al Quwain +971)581248768 , where I can buy abortion pills in Fujairah +971)581248768 , where I can buy abortion pills in Ras al Khaimah +971)581248768 , where I can buy abortion pills in Alain+971)581248768 , where I can buy abortion pills in UAE +971)581248768 we are providing cytotec 200mg abortion pill in dubai, uae.Medication abortion offers an alternative to Surgical Abortion for women in the early weeks of pregnancy. Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman Fujairah Ras Al Khaimah%^^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Dubai Abu Dhabi Sharjah Deira Ajman
^%$Zone1:+971)581248768’][* Legit & Safe #Abortion #Pills #For #Sale In #Duba...
Costco financial analysis may 2008 slideshare
1. May 15, 2008 <br />Gregg Carlson<br />carlson.requests@gmail.com<br />COSTCO WHOLESALE <br />Executive Summary<br />Costco reported solid chain-wide comps (7%, 7%, 7% and 8% Jan. – Apr.) during calendar 2008 in the face of a challenging economic climate for consumers. <br />Many consumer / retail names reported declining to outright negative comps during the same period as negative economic headwinds took their toll on consumers(1).<br />Channel checks in Las Vegas market during January – April 2008 of casinos, restaurants, retail stores and malls indicated persistent weakness as overall softness in traffic counts and other volume indicators were prevalent. On the other hand, Costco’s local traffic appeared to have held up during the period (based on two per week store visits between January – April). Costco’s local traffic also appeared to be roughly in-line with same store 2007 and 2006 levels(1).<br />Economic conditions in Las Vegas are currently negative owing to housing, unemployment and gasoline/food inflation issues. Currently Las Vegas is near the top of negative rankings as one of the worst housing markets in the U.S. as well as above the national average for unemployment. As a significant value provider to consumers, Costco appears to be benefiting locally despite these and possibly due to these conditions.<br />So while what happens in Vegas stays in Vegas, my thesis is that this is not the case for the local consumer, as local negative consumer economic issues are consistent with, to worse than negative national issues. While I am not extrapolating a local two store Costco viewpoint over the national footprint, local traffic observations are consistent with positive company wide reported comps. <br />The company is scheduled to report Q3 earnings on Thu 5/29/08. Selected analysts are predicting 7ish comps. Average consensus is .65 eps and $16.3 B in revenue.<br />The attached research report for Costco explores the above issues in greater detail and includes an in-depth analysis (historical, current and prospective) of the company. It also includes a comparison of Costco to its principal competitors on selected key financial metrics. <br />I have maintained a favorable opinion of the company and its stock in recent years. I continue to maintain a positive long term view of Costco’s future equity value prospects. Recently the stock price has adjusted upward as the street reacts to continued positive company performance despite the overall negative economic climate for consumers. As a result, on a near term basis, the stock appears to be near fully valued. Due to its persistent secular growth characteristics, I continue to like the name long term and would recommending adding to positions on pull backs.<br />(1) See Appendix E - Consumer data & survey of comps and other information.<br /> <br />May 15, 2008 <br />INSIDE<br />> Investment Thesis<br />> Recent Results & Trends<br />> Near Term Outlook<br />> Membership Fees<br />> Channel Checks<br />> Industry Sales<br />> Ratio Analysis<br />> Balance Sheet & Cash Flow<br />> P&L<br />> Comps Data<br />> Stores by Location <br />Gregg Carlson<br />carlson.requests@gmail.com<br />GREGG CARLSON research<br />COSTCO WHOLESALE <br />37 Million Chickens (1) (2) (4) (5) <br />Company Description<br />Costco is the dominant warehouse retailer in the industry with 534 stores (391 in the U.S. and 143 abroad). Costco provides value to customers and employees through lower prices and above average compensation. The company has delivered consistent positive comps in each period of the last ten years and also during the most recent 60 months (the period researched) while increasing its footprint on a 10 year CAGR of 6%. FY08 estimates for average sales per warehouse are $135 million which is 2x – 3x higher per store than its principal competitors (3). Costco’s market share has grown from 50% to 56% between 1998 to 2007.<br />Costco’s 10 year average membership renewal rate is 86% - 87%. On a LTM basis, membership fees generated approximately $1.5 billion in free cash flow.<br />The company has an extremely strong balance sheet and generates a significant amount of cash flow from operations that has averaged approximately $1.9 billion per year over the last five years. The company recently increased its debt level from 1x to 2x ebitda to buy back $4.4 billion of stock between 2005 and Q2 2008.<br />The company generated $64.4 billion in revenue during FY 2007. Revenue grew at an 11.4% CAGR over the last decade.<br />Valuation<br />At a recent $71 price, the stock is trading at 21x, 18x FY09 and FY10 earnings estimates which is near recent year peak forward multiples. On a DCF basis, using a 9% earnings growth rate (for 5 year explicit forecast period) and 5% terminal earnings growth assumption implies a 10% rate of return ex dividends and stock repurchases. <br />On a near term earnings basis Costco appears to be fully valued. On a long term basis the stock looks moderately undervalued as the 10% rate of return forecast is based on the assumption that Costco only executes one half of its announced expansion strategy. <br />The company sold 37 million chickens during FY 2007<br />Note: see accompanying models for additional detail and analysis<br />See Appendix C – Sales per Store for additional information<br />(4) See Appendix D – General Overview of the Warehouse Club Industry.<br />(5) See Appendix F – Costco mob checkout scene<br />GREGG CARLSON research page 2 <br />Investment Thesis<br />Costco has been and remains a secular growth story as it has consistently grown its earnings and cash flows over the last ten years. Earnings growth has been function of footprint expansion and same stores sales growth. Over the last 10 years, the company has grown its footprint at a 6% CAGR and plans to do the same over the next decade. The earnings CAGR over the last decade is 11%. The company has consistently generated and grown free cash flow which has been used to fund its expanding store base, pay dividends and repurchase shares.<br />The company has created significant value for consumers and employees based on its pricing and compensation practices. Because of the value proposition and “treasure hunt” experience offered its customers, Costco enjoys strong customer loyalty with high membership retention levels (86% - 87% per year over the last ten years).<br />Costco’s shareholder returns (ex dividends) have outpaced the S&P 500 over the last 5 and 12 year period respectively as follows:<br />Approximate<br /> 5 year return 12 year return<br />Costco100%600%<br />S&P 500 50%450%<br />In the retail space comps are all to important and based on this measure, Costco has posted exceptional results over the last 5 and 10 year periods with positive comps in all periods. Costco has generally outperformed its principal competitors, Sam’s and BJ’s.<br />GREGG CARLSON research page 3 <br />The company currently operates 529 stores and is looking to double the store count to approximately 1,000 over the next 10 year period as follows:<br />LocationCurrentAdditionsFutureUS (1)389323712Canada7534109Mexico303161UK 193150Asia166177Other013135294931,022<br />Costco operates stores in 40 states within the U.S. with the biggest store concentration in California (21% of total).<br />The expansion target implies that the store count could increase 6% - 7% per annum. Assuming that comps grow at 5% and adjusting for slack implies that revenues could grow at approximately 10% for the foreseeable future. Earnings could grow at a higher rate if Costco can achieve some incremental margin expansion, as operating income has ranged from 2.5% - 2.9% between 2003 and 2007.<br />Over the last decade, the stock has traded at a forward PE of approximately 20x – 30x while trading at 18x – 21x over the last five years. At a recent price of $71, the stock is trading at 21x and 18x consensus 2009 and 2010 earnings estimates, near the high end of the recent five year range. On an enterprise value to ebitda basis the stock has traded between 10x – 26x EV/ebitda over the last decade and 10x over the last five years. The stock is currently trading at 9x and 8x FY2009 and FY2010 estimated EV/ebitda. On a DCF basis, at $71 per share assuming earnings grow at an 8% CAGR over five years, using a terminal growth rate assumption of 5% implies a 10% return before dividends and share buybacks. The DCF model also assumes that one half of the current pipeline would be built out, which may be conservative.<br />On a near term basis the stock appears to be fully valued. On a longer term basis the current stock price is lower than my intrinsic value estimate assuming that secular growth characteristics persist.<br />GREGG CARLSON research page 4 <br />06985<br />00<br />GREGG CARLSON research page 5 <br />Recent Results & Trends<br />For the 2nd and 1st quarters of FY2008, revenues increased 12.2% & 11.7% respectively on a YOY basis with 7.2% and 7.8% of the increase attributable to comps, 3.3% – 3.6% driven by new stores with the remainder attributable to other factors.<br />Gross margins were 100 – 200 bps higher than the prior year while operating income increased 60 and 50 bps respectively due to margin expansion and SG&A leverage.<br />EPS was up 37% and 15.7% due to the factors described plus the share count reduction impact from buyback activity.<br />Comps have held up in recent months despite negative economic issues in the U.S. as follows:<br />April 2008 comp8%<br />Average for January, February and March7%<br />Comps for prior 3 months7%<br />Costco’s comps are impressive due to their consistency given the lackluster performance of most other retailers and consumer names during recent months. Costco appears to be doing well in the current negative economic climate. In general, retailer monthly comps have been lackluster to outright negative except for retailers benefiting from value seeking consumer behavior which includes names like Costco, Wal Mart (Sam’s Club), BJ’s and Burger King, for example.<br />Local channel checks of Costco are consistent with the company’s overall positive comp performance. In short, despite challenged local economic conditions, company traffic and consumer spending at Costco have held up so far.<br />At the same time Costco’s sales composition has changed with International sales comping at 16% - 20% in recent months due to U.S. currency weakness with gasoline sales increasing due to the recent significant price increases. Per the company Q2 conference call, a summary of comps, general conditions and other key issues is as follows:<br />Comps for December, January and February were 7%, 7% and 7%.<br />Transaction frequency was 2.5 % while transaction size was 5.5% which totals 7%. The company indicated that frequency picked up some relative to company history.<br />On a regional basis the Northwest, Northeast and Southeast comps are near the company average while California is below the company average but still positive.<br />On a category basis, food and sundries comps are better than the company overall average while hardlines and softlines are below the average. See Appendix B – Sales by Category for category definitions.<br />In hard lines, the deli, electronics and sporting goods categories are solid while office supplies, lawn & garden, home furnishings and jewelry are negative.<br />6)In general, non-discretionary categories have held up while discretionary categories have been weaker due to current negative economic conditions. Private label revenues continue to grow to approximately 17% of total.<br />7)International sales were solid overall. Specifically the UK has been weak but appears to be gaining some traction. Korea, Taiwan and Japan are strong. In Korea, the company recently opened a store with 56k paid members which is the equivalent to the approximate size of the membership base for stores that are 15+ years old. In Korea, the market appears to be under penetrated based on the small store count vs. population sizes of cities.<br />Gross Margins (in bps) increased between Q407 and Q208 on a YOY basis as follows:<br />Q407Q108Q208<br />Core merchandising (90% of company categories)+34+44+29<br />Other adjustments 4 (35) ( 5)<br /> Total increase+38+9+24<br />Costco proceeds with expansion plans that may benefit from macro real estate issues as land parcels are coming into the market at favorable prices after falling out of other development projects. During FY08 the company plans to open 28 net new stores (37 new less 9 relocations). During FY08 new locations will be just north of 75% market in-fills.<br />The company is comfortable with First Call eps estimates for Q3 and FY 2008.<br />GREGG CARLSON research page 6 <br />The company discussed inflationary cost increase impacts on the business. In general inflation could benefit their private label business as price pressures drive consumers to more competitively priced private label products. A big chunk of the price increases is in gasoline where they are in effect, passed on to consumers. Costco does not have to carry every brand or size like, Albertson’s, Wall Mart, Safeway or Target, for example, which allows the company to be flexible and opportunistic in terms of its buying strategy by seeking out the most optimal transactions. In general, it is not clear if margins will be negatively impacted by inflation.<br />In terms of taking market share, the company stated that it takes a little from a lot of competitors with possibly the most from supermarket and drug chains as their merchandise overlaps approximately 60% of Costco’s. <br />Membership counts at the end of Q2 2008 are as follows:<br />28.3 million total member households with total membership at 51.8 million including spouse membership cards. Total member households were 27.8 at Q1 2008 and 27.4 at Q4 2007.<br />Total membership categories break down is as follows:<br />Gold Star 19.3<br />Primary business 5.5<br />Business add on’s 3.4<br />Total member households 28.3<br />On an ex Mexico basis, on average members per warehouse were 56k in both Q2 FY08 and Q1 FY08. Also, paid executive members (6.9 million, 24% of membership base) generate approximately 50% of sales. Finally, Costco indicated that there was little change in sales mix between Gold Star and business members during Q2. See Appendix B – Sales by Category for additional information.<br />Near Term Outlook<br />Comps for March and April were 7% and 8%. The reported underlying trends in the numbers appear to be similar to recent reported results, namely significantly impacted by gasoline sales and positively impacted by currency effects in international markets.<br />During the Q2 2008 conference call, the company indicated it agreed with consensus eps estimates for Q3 and FY 2008 as a whole. Gasoline prices have continued to increase during Q3. The U.S. will soon begin summer driving season. As a result of this and other factors, the general consensus is that gasoline prices will remain elevated for the foreseeable future. On a local price check basis, Costco appears to be priced approximately .10 less per gallon that its immediate located competitors which drives the gasoline business as well as positively influencing store traffic volume.<br />Both Wal Mart and Bj’s have posted positive comps in recent months owing to the consumer trade down value seeking behavior in the current economic climate.<br />Membership Fees<br />Costco derives a significant amount pretax income and cash flow from operations (CFO) from membership fees (see table below). Since 1998 (the period researched) membership fee revenue has increased in each and every year. For FY 2008 and the previous four years, membership fee income has increased at approximately 11% and has contributed approximately 70% of Costco’s net income. Membership fee income is essentially pure free cash flow as there are few direct costs associated with it. Over the last decade approximately 86% - 87% of Costco’s members have renewed their memberships. On average (ex. Mexico) there are approximately 56k members per Costco store.<br />Costco has raised membership fees three times over the last nine years with little if any impact on the overall renewal rate. The most recent fee increase was during May 2006 at $5 per individual (Gold Star) and business member. While it appears that the company could raise membership fees should it choose to, during the Q2 FY2008 conference call the company indicated that it would not raise fees anytime soon. Although it is not planning on raising fees, Costco’s ability to do so hinges on its unique store experience and value proposition offered to its customers. <br />GREGG CARLSON research page 7 <br />Costco has increased it store count by approximately 6% on average in each of the last ten years. Costco back fills existing markets with stores (approximately 75% of FY 2008 new store activity) or builds stores in new markets. Costco’s new stores each year in the aggregate tend to produce above company average comps for a several year period as a given market is developed net of cannibalization on adjacent stores. This pattern, plus the renewal rate have been the primary driver of YOY growth in membership fees. <br />Costco’s goal of doubling its store count over the next ten years implies that this pattern may continue. However in order to be conservative we have reduced the YOY growth assumption in membership revenue from recent levels of approximately 11% to 5.3% and 7.5 % in 2009 and 2010.<br />Costco Membership Fee Analysis<br />Channel Checks<br />Gasoline, chickens, milk and golf shirts. Costco is a unique experience in that shoppers often walk out of the store with a variety of goods including items they may not have planned on purchasing. Ultimately, the best way to understand Costco is to become a member and shop at a store. This is what I did several years ago at a then new store that opened in our neighborhood. After observing store traffic continually increase in recent years I read the chart in the annual report that shows positive sales increases in each and every year for each group of vintage year stores. My personal experience and observations at a local Costco are consistent with this chart (see comps section of report for sales history by vintage year stores). Why is this the case? In no particular order, my thesis is:<br />1)The stores are well maintained and staffed with positive service oriented employees, many of which have been present for sometime.<br />High quality/value proposition merchandise that turns over rapidly means that at Costco, consumers know that goods do not stay on the shelves long. At Costco, “if you like it you better buy it” or take the risk that the merchandise will not be available.<br />The strong comparative value proposition to other retailers in the merchandise/pricing/value combination.<br />A variety of merchandise that allows for shopping consolidation.<br />The treasure hunt atmosphere organization of the store brings out the shopper in its customers.<br />Monitoring traffic at two of the four stores in the local market on a regular basis for several years provided a baseline comparison to 2008(1). Twice weekly store observations during January - April 2008 indicated that traffic levels held up while simultaneously weakening in virtually all other retail/consumer business that I monitor.<br />Although this information is antidotal in nature, it is worth noting that in Las Vegas, consumers currently face overall tough economic conditions including high and rising energy costs, a relatively high unemployment rate and comparatively poor housing market (2). <br />GREGG CARLSON research page 8 <br />Local observations of persistently strong traffic patterns within the context of tough economic conditions are consistent with Costco’s chain-wide positive comps during January – April. So while what happens in Vegas stays in Vegas and may not apply to other markets, I doubt it and believe that there are more similarities than differences between Las Vegas consumer patterns and other regions.<br />In summary, Costco’s business appears to be holding up locally and benefiting from consumer value seeking and shopping consolidation behavior during tough economic times. Based on nationally reported comp numbers, company comments and local observations, local patterns appear to be similar to national patterns for Costco. Based on informal polls of friends, family, acquaintentances and Costco isle surveys, I have detected a high loyalty rate in terms of membership renewals and shopping persistency with a pattern of using Costco as the core shopping point in a family budget while simultaneously using other more specialized retailers to fill in gaps based on selection and preferences. This pattern has the potential effect of Costco taking more wallet share in a small way from other retailers in several categories, at point mentioned in Costco’s recent Q2 conference call.<br />While Costco does little if any advertising, informal polling of Costco employees indicates that there is a positive consumer response to Costco’s periodic mailers as drivers of store traffic. Locally, geographic proximity, gasoline sales, word of mouth and extremely busy weekend parking lots, are some of the factors that drive traffic to Costco stores.<br />See attached model for details. In general, twice weekly January – February store visit observations of parking lot occupancy and store traffic patterns were compared to similar observations in 2007, 2006, and 2005, etc.<br />January – March unemployment rates in Las Vegas were 5.5%, 5.4% and 5.6 (per NV department of Employment security) which were higher than comparable national numbers of 4.9%, 4.8% and 5.1%. On a relative basis, Las Vegas ranks near the top of the list for cities in the U.S. with the high unemployment rates.<br />Housing foreclosure statistics remain at high levels compared to recent years for Las Vegas with approximately 11.5K homes in the foreclosure process. During January foreclosures approximately equaled new home sales at approximately 1k units each. January, February and March median existing home sales prices are approximately -20% on a YOY basis. During Q4 2007 the YOY negative price adjustment was 13%.<br />In March 2008 the NV Department of Employment Security indicated that “locally and nationally job losses plus looming job losses, high gasoline prices, rising food costs, declines in housing values and increases in foreclosures have driven consumer confidence to new lows.”<br />Various economic statistics for Las Vegas (sourced from Applied Analysis – Las Vegas and other sources) for March 2008 are:<br />Existing home sales -31%, Median home price -20%, New home sales -30%, new home prices -18%, housing permits -72%, total employment -.3%, average gasoline price $3.53 per gallon and consumer confidence index -40%. Station Casinos and Boyd Gaming Las Vegas locals net revenues -4% and -6% respectively, on a YOY basis for Q1 2008.<br />Industry Sales<br />At the end of 2007, industry sales were $114.9 billion. Costco’s market share was 55.5% - 56% in 2006 – 2007 and estimated to be 57.4% in 2008. It’s market share is well in excess of its “fair share” based on the number of units as it’s fair share in units was 38%, 39% in 2006 - 2007, and estimated to be 40% in 2008 respectively as Costco’s sales per unit are significantly higher than its competitors Sam’s Club (approximately 1.8x) and BJ’s (approximately 2.6x). I have used street consensus estimates for each company for 2008 – 2010. For 2011 – 2012, I have used a growth estimate assumption. Based on these assumptions, Costco’s market share would grow from the 2008 estimate of 57.4 to 60% by 2012, an approximate 360 bps increase. The forward sales average growth rate assumption included in my model for Costco (2008 – 2012) is approximately 7.3% which is significantly lower than company historical average rate of 10.7% between 2003 to 2007. <br />GREGG CARLSON research page 9 <br />In recent months comps have been positive and have generally met or exceeded expectations while many other retailers have reported weak to negative comps. In Costco’s Q2 conference call the company indicated comfort with forward street estimates for FY2008 implying some level of comfort in connection with the revenue forecast. Costco will increase it’s footprint by approximately 6% during 2008 and possibly 6% - 7% thereafter based on it’s longer term expansion goal of 1,000 stores over a ten year period.<br />GREGG CARLSON research page 10 <br />Costco Sales, Warehouses & Market Share<br />(1)Prior to 2006 for the periods 2003 – 2005 Costco’s market share increased from 52.4% to 53.9% while generating significantly more sales per store than its principal competitors. Similar to the periods reported on Costco’s market share was well in excess of its fair share based on number of stores (see accompanying model sheet titled Warehouse Comps for additional detail).<br />Ratio analysis<br />Costco’s ratios were analyzed on a stand alone and comparative basis from a financial risk perspective as well as operating efficiency and return on capital vantage point. I have compared historical data for Costco to, Wal Mart, Sam’s and BJ’s to understand historic trends and relationships in addition to recent trends.<br />Financial Risk<br />Costco’s risk is viewed as low due to consistency of its revenues, margins and cash flows as well as conservative capital structure. Over the last ten years through FY 2007, Costco’s sales have positively increased in each year with predicable margins (due to the nature of its business model self imposed margin limit).<br />Cash flow from operations has also increased in each and every year except one. Over the last decade Costco has expanded its store foot print at a pace that has been largely self funded by cash flow from operations.<br />On a debt metric basis, Costco is viewed as extremely conservative with a 2007 debt of ebitda ratio of 1.8x after the debt increase made to support stock buybacks. See the table below for details:<br />GREGG CARLSON research page 11 <br />COSTCO debt metrics<br />Operating Efficiency<br />I examined Costco’s current ratio, inventory turns and relationship of working capital to revenues to judge Costco’s operating efficiency. Costco’s efficiency was also compared to Wal Mart and BJ’s.<br />A key component of the company strategy is to adhere to a low margin strategy that creates a high velocity of inventory turnover. Costco turns its inventory over approximately 12x per annum which is approximately 1 – 2 turns higher than Wal Mart and BJ’s. In terms of working capital management, Wal Mart outperforms Costco on revenue to working capital basis as Wal Mart operates by design at a working capital deficit while Costco and BJ’s do the opposite and operate with a surplus.<br />COSTCO efficiency ratios<br />WAL MART efficiency ratios<br />GREGG CARLSON research page 12 <br />BJ’S efficiency ratios<br />Return on Capital<br />Costco’s returns were examined on a historical trend basis and also compared to Wal Mart, Sam’s and BJ’s.<br />In summary Costco has generated similar ROE’s to BJ’s and lower ROE’s than Wal Mart and Sam’s (estimated). On a ROA basis Costco has generated comparable ROA’s to BJ’s and Sam’s (estimated) and lower ROA’s than Wall Mart.<br />The factors that explain the differences are:<br />Costco recently increased leverage to buy back equity that on a pro forma basis will positively impact ROE by approximately 250 BPS between 2008 – 2010. Costco is also taking steps to increase gross margins within the parameters of its overall margin/pricing strategy. Specifically the company has changed its returns policy for consumer electronics where margins had contracted in recent years due to its liberal returns policy. Also Costco may gain some incremental margin on large volume items and private label items where Costco may be able to distinguish itself and drive increases. See the tables below for Costco, Wal Mart, Sam’s and BJ’s ROE/ROA comparison and Dupont analyses.<br />GREGG CARLSON research page 13 <br />COSTCO Dupont analysis and<br />ROE/ROA comparison<br />Wal Mart, Sam’s, & BJ’s Dupont analysis<br />With comparison to Costco pro forma<br />Calculation adjusted for leverage<br />GREGG CARLSON research page 14 <br />Theoretical Growth rate<br />Costco’s historic expected theoretical earnings growth rate was calculated and compared to actual earnings growth. The analysis indicated that the company has grown it’s earnings within the parameters of it’s theoretical growth rate essentially growing the majority of its historical earnings out of ROE and minimizing equity or debt issuance over the last decade.<br />COSTCO theoretical and<br />actual earnings growth rate<br />Balance Sheet and Cash Flow<br />See Appendix A and accompanying model for historic and forecasted Balance Sheet and Cash Flow detail.<br />P&L<br />See Appendix A and accompanying model for historic and forecasted P&L detail.<br />Costco has taken the initiative to increase margins within its business model strategy in connection with increasing private label penetration and changing its electronic product return policy, for example. Based on the FY 2008 estimate, Costco’s eps would increase for operating margin improvement as follows:<br />GREGG CARLSON research page 15 <br />Comps Data<br />Costco’s comps, are a model of consistency. Costco has posted positive comps in each and every year since 1999 (the period researched). The company has also posted positive comps in each and every month over the last 60 month period (through the period ending April 2008). Costco has also increased sales in every year in all vintage year store groups since 1998. In short Costco has delivered stellar consistency while increasing its foot print at a 6.4% CAGR over the last ten years. Costco’s comp results have also outperformed its principal competitors for most of the last five years.<br />As the U.S. economy has weakened during the latter part of 2007 – 2008, the company has continued to post positive comps and appears to be benefiting from overall consumer weakness in connection with consumer value seeking behavior in what has become an increasingly challenging consumer environment.<br />Costco’s International operations have performed strongly as well posting positive comps in local and U.S. currency. International operations currently make up approximately 25% of the store base and are forecasted to be approximately 30% of the ten year 1,000 store company target.<br />The results are a function of a variety of factors for the best in class retailer that include and are not limited to:<br />High quality, long tenured and stable management team.<br />A business model strategy that provides significant value to customers based on the quality of Costco merchandise and ultra competitive pricing/margin strategy.<br />High customer retention.<br />A small base of constantly changing SKU’s (approximately 4,000) combined with core merchandise categories that keep the customer experience fresh while allowing the company to stock the store with merchandise based on changing customer preferences and needs.<br />The company’s ability to seek out buying opportunities based on unique merchandise of cost / pricing opportunities.<br />See the tables below for detailed comp data:<br />GREGG CARLSON research page 16 <br />COSTCO sales per warehouse by vintage year<br /> year + other data<br />GREGG CARLSON research page 17 <br />COSTCO monthly, quarterly, annual comps<br /> vs. BJ’s & Sam’s<br />GREGG CARLSON research page 18 <br />COSTCO monthly comps detail<br />GREGG CARLSON research page 19 <br />Stores by Location<br />The company operates warehouse in 40 states, Puerto Rico, Asia, UK and Mexico. Its biggest concentration of stores is in California. While remaining positive, California comps have diminished somewhat due to gasoline prices and housing issues. As 20.6% of Costco’s store base, California is material to Costco’s performance.<br />Appendix A – Costco Balance Sheet, Cash Flow and P&L<br />Balance Sheet<br />Cash Flow<br />P & L<br />P&L – Common Size<br />P & L – YOY<br />Appendix B – Sales by Category<br />Appendix C – Sales per Store & Online Sales<br />Appendix D – General Overview of the Warehouse Club Industry<br />The wholesale club industry has the lowest expense structure among comparable retail categories offering customers the lowest prices. In 2007 the industry generated $114.9 billion in aggregate revenues, representing an approximate 9% five year sales CAGR, which is above the growth of the overall retail industry (excluding auto and gasoline sales), 6% growth for general merchandise sales and 4% growth for U.S. food stores (1).<br />The industry is dominated by three companies Costco, Sam’s (a Wal Mart subsidiary) and BJ’s. Costco’s stores are located in 40 states with 40% in the U.S. Southwest and approximately 20% outside of the U.S. BJ’s stores are located in 16 states within the Northeast and Southeast while Sam’s operates stores in 48 states.<br />The principal industry competitors are category killer specialty retailers, supermarkets and super centers. As 75% of food and consumables are found in supermarkets, this segment is significantly overlapped to the warehouse industry. <br />While the companies slightly tailor their prices to local markets, a significant determinant of prices within company pricing models is their principal competitor prices.<br />Costco follows pre determined parameters that by design sacrifice margin but drive inventory turnover and customer loyalty. Costco’s self imposed margin limits are 15% on private label goods and 14% on branded goods. The three major players in the industry have continued expansion goals. Recently comps of the three companies have held up in the face of consumer economic issues while many other retail category comps have not.<br />Recent customer surveys by Wal Mart indicate that price is a significant and bigger determinant of where consumer shops in 2008 vs. 2007. Wal Mart – Sam’s have taken initiatives to improve the customer experience in their stores while Costco’s customer experience is viewed as favorable. Costco generates significantly more business per store than its principal competitors. <br />In general the three major players plan to continue to grow their store foot prints at an approximate 6% growth rate. BJ’s recently indicated that they plan to continue to target 3% - 5% annual comp increases. The three major competitors have consistently posted positive comps in recent years.<br />Per presentation by Herb Zarkin - BJ’s CEO at a recent Lehman Brothers industry conference.<br />Appendix E – Consumer data & survey of comps and other information<br />Reading, Watching, Walking and Talking<br />For several years I have covered, researched and invested in the gaming sector. In addition to modeling and other related forms of securities analysis I have monitored the industry as well as other consumer segments by being inside the buildings watching, walking and talking on a regular basis. The effort provides historic and current perspective in terms of traffic and volume metrics and has been an integral part of my overall securities analysis approach for gaming and other consumer names.<br />During the fourth quarter of 2007 and in a more pronounced way, first quarter of 2008, observational evidence began to mount that a slowdown was occurring in a wide variety of consumer related businesses that I was monitoring.<br />Specific example names include:<br />Restaurants<br />Cheesecake Factory<br />Baja Fresh<br />PF Changs<br />Claim Jumper<br />Starbucks<br />Retailers & Malls<br />Kohl’s<br />Nordstom’s<br />Gap<br />Jos Bank<br />Pier One<br />Lowe’s<br />Borders<br />Fashion Show Mall (Las Vegas Strip)<br />Forum Shops (Las Vegas Strip)<br />Palazzo retail (Las Vegas Strip)<br />Casinos<br />STN - Red Rock & other STN<br />BYD - Suncoast<br />The strip including Wynn, Palazzo, Venetian, TI, Caesars, Bellagio, Luxor, etc.<br />Wall Street and these companies have now reported extensively on the slowdown. During Q1 2008, quarterly company reports and monthly comp reports indicated widespread weakness that is consistent with what I observed. By category, the Gaming industry reported weak volumes and overall results within Las Vegas and across the U.S. Broadline retailers like Dillards, JC Penny Kohl’s and Nordstrom’s have reported negative comps. Restaurants have reported negative comps and higher input costs. At the same time discount style grocery stores like Kroger have reported positive numbers while the premium chain segment of Safeway and Whole Foods have not. Despite the negative environment and likely because of it, discount staples retailers like BJ’s, Wal Mart and Costco have reported strong national comps which are consistent with my local channel checks.<br />As the consumer pressures mount, consumer discretionary businesses have felt the negative impact of the slowdown while a pattern shift has occurred in non discretionary names like Costco and Wal Mart with mounting evidence that the consumer has traded down and exhibited value seeking behavior.<br />