This document analyzes the performance of a large natural and organic supermarket company with 456 stores in the US, UK, and Canada. It had $8 million in weekly visitors and 87,000 employees in 2016. While the company's net revenues were increasing, its cost of net revenue was increasing at a faster rate. The company's return on assets was better than competitors at 9.1% in 2016. Its return on equity was increasing to 15.7% in 2016 due to increased financial leverage, though it remained lower than competitors. The company was decreasing risk to shareholders by issuing more debt.

1. Performance Analysis 2016
Master in Management, Group A F3

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Company
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Largest Natural and Organic Supermarket
456 stores in US, UK, and Canada
Avg. Store: 35,000 SKUs & 8M Visitors p/w
87,000 employees, 1.6k stakeholders
#181 F500, with 2016 closing price at 30.30

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Food Retail Industry
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Big players are entering organic sector
Consumers more conscious about purchases
Small format, attentive experience
On-Demand Grocery Delivery

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Strategy 4
New Stores
Geographic Reach
365 Value Brand &
others exclusively
Exclusivity
In-Store Experience
Third Home
Invested Team and
Contribution
GainSharing
Technology
Customer Reach

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Income Statement 5
COGS > Sales
COGS > Expenses
GPM
EBIT Margin
EBITDA Margin
NET INCOME
Depreciation/Amortization
Earnings Per Share

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Balance Sheet: Assets 6
Property and Equipment
Cash
Short-Term Investments
Current: 31% vs NonCurrent: 59%

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Balance Sheet: Liabilities & SHE 7
Current Ratio
Stockholder’s Equity
Debt-to-Equity Ratio
Current: 21% vs NonCurrent: 28%
Senior Notes

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Cash Flow Statement 8
Cash from Operating Activities
Deferred Income Tax
Merchandise Inventory
Prepaid Expenses
Accrued Payroll

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Cash Flow Statement 9
CAPEX
Securities-Available for Sale
Sales and Maturities of Securities
Purchase of Treasury Stocks
Dividends, Shares Outstanding
Credit Line, Debt
2015 > 2016

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Analysis of ROA
Working Capital vs Fixed Assets
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ROA Analysis (EBI/Total Assets) 2012 2013 2014 2015 2016
EBI Margin 4% 4.3% 4.1% 3.5% 3.5%
Total Assets Turnover Ratio 2.44 2.38 2.52 2.68 2.60
ROA% 9.7% 10.2% 10.3% 9.3% 9.1%
Working Capital (in millions) 1,126 892 499 292 634
Current Assets Turnover Ratio 5.6 6.5 8.1 10.0 8.0
Sales per Unit Area 918.6 937.4 936.2 925.7 883.4
Capital Acquisition 2.0 1.9 1.5 1.3 1.6
Fixed Asset Turnover 5.6 5.6 5.3 5.1 4.8
Fixed Asset Turnover
Sales PUA
WC + Cash + ST Inv.
Total Return on Assets

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Analysis of ROE
Financial Leverage
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Decomposing ROE 2012 2013 2014 2015 2016
EBI Margin 4% 4.3% 4.1% 3.5% 3.5%
Turnover Ratio (over total assets) 2.44 2.38 2.52 2.68 2.6
Financial Leverage 1.41 1.41 1.47 1.51 1.73
ROE% 13.7% 14.3% 15.1% 14.1% 15.7
Debt-to-Equity Ratio 0.39 0.43 0.51 0.52 0.97
Cost Of Debt 0.0% 0.0% 0.0% 0.0% 3.9%
Total Return on Equity
Weight of Equity
Cost of Debt < ROA

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Investment Worthiness
Market Price, Dividend & Yield
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2012 2013 2014 2015 2016
Avg. Share price per share 67.025 59.13 37.85 45.04 31.48
Dividend per share 0.28 1.4 0.48 0.52 0.54
Split adjustment factor 1:1 2:1 1:1 1:1 1:1
price/earnings ratio 52.5 39.8 24.0 30.1 20.2
Dividend yield 0.4% 2.4% 1.3% 1.2% 1.7%
Price per Share
Dividend Yield

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Competitor Performance
Whole Foods vs Others
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Conclusion
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Growth Strategy
Net Revenues increasing but Cost of Net
Revenue is increasing faster
Decrease risk from shareholders by
issuing debt
ROA% better than competitors
ROE% lower than competitors but is
increasing (due to Finance Leverage)
Price / Earnings Ratio higher than
WallMart