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Retail:
Grocery Stores and Supermarkets
from First Research
Industry Overview
The $400 billion US retail grocery industry includes about 40,000 companies that operate 70,000 grocery stores (excluding convenience stores). Large companies include Kroger, Supervalu, Safeway and Ahold. The industry is concentrated; the 50 largest companies hold about 70 percent of the market.
Although not traditional grocers, mass merchants like Wal-Mart and Costco have rapidly expanded their sales of groceries. Wal-Mart is now the largest seller of groceries in the country, with annual grocery sales of about $60 billion.
COMPETITIVE LANDSCAPE
Demand for food products is limited by the 1 percent annual growth of the US population. Profitability of individual companies depends on having the right product mix and on efficient operations. There are large economies of scale in operations and purchasing. Small grocers can compete effectively only by offering specialty products or better produce or special services such as take-out food.
The average supermarket of large chains has $14 million in annual revenue, and revenue per employee of $150,000. Companies with fewer than five stores have annual revenue per store of $6 million and revenue per employee of $130,000.
PRODUCTS, OPERATIONS & TECHNOLOGY
Grocery stores sell three major types of products: perishable foods (50 percent of revenue); non-perishable foods (30 percent); and non-food items (20 percent). Within the perishables category, the largest sellers are meats and poultry, produce, dairy, and frozen foods.
The operations of retail grocers involve wholesale buying of foods and other products, coordinating delivery to stores, handling and stocking, advertising and pricing, and managing labor. The typical supermarket is 45,000 square feet and carries 40,000 different items, or stock keeping units (SKUs), but some markets are over 100,000 square feet.
While small chains and independent stores buy most products from wholesale distributors, big chains often buy directly from manufacturers. A grocery chain may buy from dozens of food distributors, either directly or with the aid of food brokers. Contracts with distributors may span several years. Some grocers belong to buying cooperatives that deal directly with manufacturers. The biggest efficiencies for large companies arise from their substantial buying power and efficient distribution systems, which result in lower prices.
Most companies with multiple stores own one or several distribution centers (sometimes over a million square feet) that receive and redistribute merchandise for their stores using a fleet of trucks. Stores are usually within 250 miles of the distribution center. Ingles Markets, a $2 billion chain, moves 67 percent of its product volume through its own distribution system, has 13 percent delivered directly to its stores by a national distributor, and 20 percent delivered by local manufacturers and distributors.
Large chains may leverage their distribution system by selling wholesale to other food retailers. Kroger, the largest supermarket operator in the US, is also one of the largest food distributors. Some companies operate their own bakeries and dairies. Large companies may operate a number of chains with different names, using a central distribution system to supply them all.
Because they have limited space to carry extra inventory, grocers rely heavily on their distributors for frequent deliveries.
Inventory management is very important to grocery retailers, both for efficiency and to identify products that are selling well or poorly. To track inventory and sales, supermarkets and grocery stores use computer technology such as scanners, and sophisticated point-of-sale, inventory, and reorder systems, extensively.
SALES & MARKETING
Merchandising (deciding which products to sell) and pricing depend very much on the demographics of the population surrounding a supermarket. Most companies study the economic characteristics of an area very carefully before opening a store. Stores will generally sell several brands of the same product, often including a private-label store brand that sells for less.
Marketing and promotion are through newspaper advertising, coupons, direct mail, store events, and special sales.
Store layout is key in funneling customers to higher-margin goods, like produce and bakery products. Average annual sales per square foot of selling space are about $500. Supermarkets typically serve customers within a 1- to 2-mile area.
FINANCE & REGULATION
Because of the very low profit margins on most grocery items (typically just a few percent of sales), companies need to move large quantities of product. Inventory turnover and cash flow are high. Industry net profit margins are close to 1 percent. Invoices from distributors are often paid within 10 days. Aside from the cost of goods sold, labor is the largest grocery expense, amounting to 40 percent of total food marketing costs. Because of uneven work requirements during the day, many supermarket employees work only part-time.
Stores and distribution properties are owned or leased. Owned stores may have additional real estate value in prime locations, but leased facilities offer more flexibility for chains that open many new stores. Some operators, like Ingles, own the shopping centers where their stores are located. Capital requirements may be high for supermarket chains that are growing rapidly or are remodeling.
Grocery stores are subject to regulations of state health departments; the Food Safety and Inspection Service of the USDA; the FDA; and OSHA.
HUMAN RESOURCES
Most jobs at supermarkets and grocery stores require relatively few skills and are accordingly not well-paid. Average hourly pay is around $11, five below the national wage. Most work involves restocking, cashiering, and bagging. A large number of employees work part-time and receive few benefits. Because of relatively low pay, many companies have high turnover. The industry's safety record is below the norm: over six injury cases a year per 100 full-time employees, about two cases more than the national average.
Industry Employment Growth
Bureau of Labor Statistics
Average Hourly Earnings & Annual Wage Increase
Bureau of Labor Statistics
Quarterly Industry Update
Sales Growing Moderately - Retail grocery sales have expanded in 2006, but experts believe that sales growth in the coming years will likely be modest. Grocery sales for the year through July increased 3.8 percent over the previous year to $276.2 billion. However, a recent Food Institute report predicts that sales growth for traditional supermarkets will fall below the inflation rate for the remainder of the decade. The slower growth will be tied in large part to continued market share gains for alternative retail food formats such as fresh food centers and super centers.
Private Label Needs Revisions - A new industry study indicates that retailers may be missing opportunities for greater profits in their private label sales. Many retailers continue to price private label products at a standard discount gap of 10 to 20 percent, even when the quality and brand recognition of the product could justify higher price points. Research also suggests that retailers diminish private label sales by offering consumers too many items in an effort to provide variety. More effective sales of higher-margin private label products could significantly benefit traditionally low-margin retail grocery operations.
Online, Take-Out Opportunities Emerge - The US consumer's increasing emphasis on speed and convenience is creating more opportunities in online sales and takeout items. Analysts predict that online grocery sales will jump 27 percent in 2006 to $4.2 billion and climb to over $8 billion by 2010. Experts also believe that more consumers are turning to take-out food items due to a lack of free time, tight budgets, and growing concerns over nutrition. Stores that can offer customers solutions may be advantaged in attracting and retaining future business.
Business Challenges
CRITICAL ISSUES
Competition from Mass Merchants - Mass marketers, like Target and Wal-Mart, are rapidly expanding their food sales. Warehouse stores and wholesale clubs, like Costco and Sam's, sell food in bulk at discounted prices. Wal-Mart has opened hundreds of "Super Centers" that combine a large food/drug store with other merchandise under one roof, attracting customers with low food prices. Grocery items account for about 30 percent of sales at Wal-Mart and Costco.
• Grocery store sales grew 3.8 percent in the first seven months of 2006 compared to year-ago; general merchandise store sales rose 5.9 percent.
• Economies of Scale Favor Consolidation - The efficiencies in buying and distribution available to large food retailers in a low-margin business make competing solely on price difficult for smaller companies. Larger companies have expanded in recent years, mainly by acquiring local and regional chains. The 50 largest grocery chains hold more than 60 percent of the market. Ahold ranks behind Wal-Mart Stores, Carrefour, and Tesco Plc as the largest food retailer.
• SUPERVALU recently became the third-largest grocer in the US when it acquired over 1,100 stores from Albertson's.
OTHER BUSINESS CHALLENGES
Low Population Growth - The overall US population grows at only 1 percent per year, limiting growth in the food business. In some local markets, however, the population can grow 3 to 4 percent per year.
Economies of Scale Favor Consolidation - The efficiencies in buying and distribution available to large food retailers in a low-margin business make it difficult for small grocers to compete solely on price. Larger companies have expanded in recent years, mainly by acquiring local and regional chains.
Grocery Store Share of Food Market is Shrinking - The percentage of food bought at food stores has been declining for decades, as changes in lifestyles have caused Americans to turn to other sources like restaurants, take-out, and convenience stores. Americans buy only 40 percent of their food at food stores, down from 45 percent a decade earlier.
Higher Risk of Food Contamination - As companies move larger amounts of non-preserved foods through their distribution systems, the likelihood of contamination increases. Despite new government and industry efforts, episodes of food-borne illnesses are still common.
Theft Losses - Shoplifting, check fraud, employee theft, and organized retail theft remain the greatest sources of annual losses for food retailers, according to Food Marketing Institute (FMI). The rising losses are forcing supermarkets to invest in new security and loss prevention methods, such as sensors in meats, biometrics, check authorization systems, background screening, access control procedures, video surveillance, and crisis management plans.
BUSINESS TRENDS
Strategic Store Layout - Conventional supermarkets change their layout to steer customers to the highest-gross-margin items (bakery is typically 40 percent, deli is 38 percent, produce is 30 percent) and to new high-margin services such as take-out, natural foods, salad bars, party planning, film processing, DVD rentals, and flowers.
Variety of Store Formats - Several different store formats have evolved recently to take advantage of changing consumer buying habits. A typical new store is less than 49,000 square feet, declining for the first time in five years. The largest section of the new stores is often bakeries (2,100 square feet). New stores frequently offer delis, fast food eating areas, pharmacies, health and beauty products, and gas pumps; 68 percent of new stores have pharmacies.
More Services - Grocery stores are adding new sources of revenue such as pharmacies, banking centers, take-home prepared foods, gas pumps, and dry cleaners. Some stores are going further, opening cafes, restaurants, and instore kitchens with chefs preparing gourmet specialties.
Centralized Buying - In a bid to match the buying efficiencies of giants like Wal-Mart and Costco, more supermarket companies are switching to a centralized purchasing system for perishables. Many other supermarket items are already being bought this way, but regional and local buying have been the norm for perishables.
INDUSTRY OPPORTUNITIES
Gasoline Sales - Big grocery chains use discount gas sales to draw customers. Kroger has fuel centers at over 20 percent of its 2,500 supermarkets.
Organic Products - Organic products are becoming more popular with consumers and often have high margins for grocers. Whole Foods, a large retailer of organic foods, grew rapidly in recent years. Currently only 24 percent of food retailers have a natural food section.
Private Label Products - Larger supermarket chains offer private label brands, which sell for less but have better profit margins. Supermarkets have been upgrading the quality of their private label offerings; Kroger carries about 7,500. Even small chains carry private label goods that have lower prices but higher margins than national brands.
Self-Checkout - As the technology improves and customer acceptance increases, more grocers are investing in self-scanning machines to speed checkout and cut labor costs. Self-checkouts account for between 15 to 40 percent of total purchases at US and Canadian retailers, according to IHL Consulting Group's 2006 North American Self-Service Kiosks study. Self-scanning has grown in various pockets around the country, and while it won't replace clerks, it usually occupies one or two aisles in stores that offer it.
Grocery Take-Out - Many supermarkets offer hot and cold take-out meals, which have high profit margins. Customers can either order in the store or call ahead of time. A drawback is that sales are only high around dinner time.
Prepared Foods - Prepared foods have become more popular with consumers who want to use prepared ingredients when they cook. Among the fastest-growing products are prepackaged salad products, meats and poultry, and prepared produce. Retail sales of refrigerated and frozen foods reached $234 billion in 2005, according to Refrigerated & Frozen Foods Retailer magazine.
Loyalty Cards - Supermarket loyalty discount cards, which almost every grocery store chain uses, are being protested by those who claim that the personal data and shopping information collected violates privacy rights. Stores, using cards to track purchase histories, are beginning to segment customers into groups based on how much and how often they purchase. Such information helps target desirable customers and cater to their needs.
Internet Ventures - The failure of pure Internet grocers hasn't deterred bricks-and-mortar supermarkets from rolling out their own online ordering systems, with orders filled from grocery store shelves by store employees and picked up by the customer or delivered for a fee.
Executive Insight
Executive: CEO
Key Focus: Differentiating Stores
Traditional grocery stores (Safeway, Kroger) compete with the big-box retailers (Wal-Mart, Target) for market share in grocery sales. Wal-Mart, with an emphasis on quality and price, has garnered about 16 percent of the grocery market nationwide. Small and midsized stores can differentiate themselves by emphasizing certain products. Selecting a particular product mix and advertising heavily can attract shoppers from a large area.
Key Focus: Offering Loyalty Cards
Loyalty cards are offered by most grocery chains to attract shoppers and encourage repeat visits. Merchandise is offered at special discounts in advertising and in-store promotions for loyalty program customers. Some stores also discount gas. Kroger uses the data from its customer loyalty database to develop targeted marketing programs to attract affluent customers more frequently.
Executive: CFO
Key Focus: Controlling Labor Costs
Aside from cost of goods sold, labor is the highest expense for grocery stores. Although full- to part-time ratios vary widely within the supermarket industry, the trend in the last few years has been for chains pressured by Super Centers and other low price retailers to decrease the number of full-time employees and increase the number of part-timers. These chains also lower wages and raise the number of hours that qualify part-timers for health insurance, sick time, vacation pay, and other benefits. However, a high ratio of part-time to full-time employees usually results in lower service quality.
Key Focus: Acquiring Capital to Support Expansion and Remodeling
Grocery chains are constantly evaluating individual store performance and assessing the demographic changes around the stores to project future performance. As a result of the analysis, chains close or sell off stores, add new ones, and remodel or relocate existing stores. Smaller stores, lacking the financial flexibility of the larger chains, may remodel existing stores and change the product mix to attract additional business. Funding for these changes comes from a combination of cash flow, additional debt, and equity infusions.
Executive: CIO
Key Focus: Providing Self-Checkout
Standard bar codes on packaged and canned items have facilitated the implementation of automated checkout stations in most grocery stores. By reducing checkout times, these stations reduce the number of cashiers required, waiting lines, and more than pay for themselves. The industry's use of debit and credit cards has further reduced cash handling, bad check exposure, and time at checkout.
Key Focus: Maintaining Real-Time Inventory Management Systems
Automated and self-checkout stands capture sales data about the number and type of items sold. This data allows automated reorders that reflect actual needs and permits carrying smaller inventories. The data also allows advertising and special offers to be rapidly evaluated, helping ensure more effective and targeted campaigns.
Executive: HR
Key Focus: Hiring Part-Time Staff
Part-time clerks in grocery stores are generally entry-level with low pay and few benefits. Consequently, turnover in these positions is high - as much as 75 percent per year. Since the main function of these clerks is restocking, little training is required. Stores constantly need additional part-time staff and recruit through in-store advertising, job fairs, and ads in local papers.
Key Focus: Training Junior Management Staff
Management tries to identify employees with potential for promotion and establish a growth track to cross-train them in different departments and put them in assistant positions to more experienced managers. As chains expand, junior staff are offered the opportunity to transfer, at higher salaries to positions of greater responsibility in new stores, and may be offered positions in regional operations or at headquarters.
Executive: Sales
Key Focus: Overseeing Merchandising
The physical placement of merchandise in a grocery store can affect its sales. Items that appeal to children, such as sugary cereals, are frequently placed on lower shelves where children are better able to see them. Merchandising personnel are constantly rearranging merchandise so the higher margin items are in the best positions to encourage sales. Reviewing checkout stand data at the end of the day can indicate the effectiveness of new product placements.
Key Focus: Measuring Advertising Effectiveness
Most grocery stores advertise specials and feature items in local newspapers and mailers at least weekly, which are sometimes supplemented with targeted mailers. Advertising effectiveness can be measured by analyzing checkout stand data, as consumers frequently identify themselves by using bar coded loyalty tags. Checkout stand data can be further refined by reviewing the historic data on loyalty program consumers, and analyzing the consumer type and location (zip code or proximity to the store). This data is held closely by the stores and shared with selected suppliers to make joint marketing efforts more effective.
Call Preparation Questions
CONVERSATION STARTERS
How does the company differentiate itself as competition grows?
Mass marketers, like Target and Wal-Mart, are rapidly expanding their food sales.
Has the company been successful at raising prices in the past year?
The efficiencies in buying and distribution available to large food retailers in a low-margin business make competing solely on price difficult for smaller companies.
Has the local population been growing in the past few years?
The overall US population grows at only 1 percent per year, limiting growth in the food business.
What advantages or challenges do adding gas pumps present for the company?
Big grocery chains use discount gas sales to draw customers. Kroger has fuel centers at over 20 percent of its 2,500 supermarkets.
What benefits does the company expect in offering or expanding its organic food selection?
Organic products are becoming more popular with consumers and often have high margins for grocers.
How successful are the company's efforts to sell private label products?
Larger supermarket chains offer private label brands, which sell for less but have better profit margins.
QUARTERLY INDUSTRY UPDATE QUESTIONS
What trends are emerging in sales growth, and what future trends are expected?
Grocery sales for the year through July increased 3.8 percent over the previous year to $276.2 billion. But a recent Food Institute report predicts that sales growth rates for traditional supermarkets will fall below the inflation rate for the remainder of the decade.
How has the store changed its private label strategy over time?
New industry research indicates that retailers may be missing opportunities for greater profits in their private label sales. Many retailers price private label products too low and cannibalize private label sales by offering consumers too many choices.
OPERATIONS, PRODUCTS AND FACILITIES QUESTIONS
How many stores does the company have? What size (square feet)?
The typical supermarket is approximately 45,000 square feet.
How many products in each store (stockkeeping units, "SKUs")?
The typical supermarket carries 40,000 different items.
What are average sales per square foot?
The industry average is about $500.
Are the stores conventional, food/drug combinations, warehouse, or some other format?
Several different store formats have evolved in recent years to take advantage of changing consumer buying habits.
Does the company operate a warehouse/distribution center? How big is the center? What percentage of store products moves through the warehouse?
Most companies with multiple stores own one or several distribution centers (sometimes over a million square feet) that receive and redistribute merchandise for their stores using a fleet of trucks.
What percentage of products is bought from wholesalers?
Small chains and independent stores buy most of their products from wholesale distributors; big chains save by buying directly from manufacturers.
What percentage of products is bought directly from manufacturers?
Most big chains save by buying directly from manufacturers.
How does the company avoid unfilled orders from distributors?
Grocery stores may need to find additional distributors from different parts of the country to fill orders if existing distributors have access to only limited products.
Does the company sell (higher margin) private-label brands? What percentage of sales is private label?
Does the company plan to add nonfood products and services in its stores?
With grocery sales slow, grocers have added a variety of goods and services.
Does the company operate its own bakery, dairy, ice cream plant, juice bottling, other?
Some companies operate their own bakeries and dairies.
What percentage of store products are perishables, like meats, produce, bakery, dairy, deli, frozen?
The national average for perishables is about 49 percent.
Does the store offer value-added convenience products, like sliced fresh fruit?
Industry estimates show that "fresh-cut" produce has grown more than 17 times in just three years. For some chains it's the most profitable item in the produce department.
Does the company offer self-checkout?
A package of four self-checkouts and an attendant station costs about $100,000.
CUSTOMERS, MARKETING, PRICING, COMPETITION QUESTIONS
What sorts of customers does the company attract to its stores?
Companies often target a specific demographic group.
What kind of consumer research does the company do?
Examples include surveys, suggestion boxes, consumer help desks, and computer tracking of buying trends.
What sort of marketing and advertising does the company do?
Examples include newspaper, TV, radio, direct mail, events sponsorship, community participation, and telemarketing.
How does the company roll out new products in stores?
When a new food product is introduced, supermarkets face the difficult task of figuring out where the new item will fit into the merchandise mix in their store layout.
How does the company use the data collected from shoppers who use loyalty cards?
Customer loyalty card data could be used to tailor prices to individual shoppers, called customer-specific marketing, to target desirable customers and cater to their needs.
What is the company's main competition?
Regional grocery store chains are especially threatened by each other, and by larger supermarket franchises, and outside competition, like superstores, drug, convenience, and discount stores.
REGULATION, R&D, IMPORT, AND EXPORT QUESTIONS
Has the store's management created specific policies concerning potential food contamination?
As companies move larger amounts of nonpreserved food products through their distribution systems, the likelihood of contamination increases.
Has the company had any contamination problems?
ORGANIZATION AND MANAGEMENT QUESTIONS
How does the company find workers?
Of all supermarket expenses, store labor accounts for the largest portion: 39 percent of the total cost of food distribution, according to the USDA.
How many employees are part-time versus full-time?
Because of uneven demand during the day and week, many employees work part-time.
How does the company choose locations for new store development?
Supermarkets usually draw customers within a one- to two-mile area.
FINANCIAL ANALYSIS QUESTIONS
How variable is the company's cash flow during the year?
Cash flow is usually fairly even, with surges around holiday seasons.
How large are inventories as a percentage of sales?
Less than 10 percent is typical.
Does the company have long-term contracts with suppliers?
Contracts may extend over several years.
Are stores and equipment owned or leased?
Stores and distribution centers may be owned or leased. Leased facilities offer more flexibility for chains that open many new stores. Some operators, like Ingles, own the shopping centers where their stores are located.
What is the average payment time on deliveries?
The industry average is under ten days.
How does the company manage daily cash flow?
Supermarkets have high cash flow.
BUSINESS AND TECHNOLOGY STRATEGY QUESTIONS
Are the company's stores in high- or low-growth areas?
Does the company have expansion plans?
The large chains have been expanding rapidly in recent years.
Has competition changed in the company's major markets?
The large chains continue to make acquisitions.
How often are stores remodeled?
Industry experts estimate that a typical store requires remodeling ten years after it opens and every seven thereafter.
Does the company plan to remodel any of its stores in the near future?
Changes in store layout can steer customers to higher-margin goods.
Does the company have an interactive Internet site?
Some stores allow customers to shop, order cakes and cuts of meat, and print coupons over the Internet.
Does the company use frequent shopper cards, or other incentives for loyalty?
Many customers have several supermarkets available to them.
What type of system does the company use to reorder products?
Many companies have electronic data interchange (EDI) with suppliers to automatically replenish inventories.
Financial Information
GROCERY STORES
(NAICS: 4451)
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12 Month Rolling Data Period
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Last Update June 2006
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Small Company Data
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Sales < $3,707,587
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Table Data Format
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Median Values
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US Private Company Data
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Aggregate
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Small Company
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Company Count in Analysis
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767
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192
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Income Statement
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Net Sales
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100%
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100%
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Gross Profit
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24.2%
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25.1%
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Operating Income
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1.3%
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1.8%
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Net Profit After Tax
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1.0%
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1.3%
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Balance Sheet
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Cash
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8.7%
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9.6%
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Accounts Receivable
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2.7%
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2.9%
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Inventory
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24.9%
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30.6%
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Total Current Assets
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52.8%
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63.1%
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Total Fixed Assets
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32.8%
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23.8%
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Other Non-Current Assets
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14.4%
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13.1%
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Total Assets
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100%
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100%
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Accounts Payable
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13.9%
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10.3%
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Total Current Liabilities
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28.7%
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26.0%
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Total Long-Term Liabilities
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14.8%
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6.8%
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Net Worth
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56.5%
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67.2%
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Financial Ratios
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Quick Ratio
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0.50
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0.68
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Current Ratio
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1.63
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1.94
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Current Liabilities to Net Worth
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71.0%
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45.0%
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Current Liabilities to Inventory
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117.0%
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81.0%
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Total Liabilities to Net Worth
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116.0%
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89.0%
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Fixed Assets to Net Worth
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69.7%
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43.9%
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Collection Period
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2.0
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2.2
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Inventory Turnover
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18.7
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12.2
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Assets to Sales
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21.0%
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26.0%
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Sales to Working Capital Ratio
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12.3
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9.8
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Accounts Payable to Sales
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3.0%
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3.0%
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Return on Sales
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1.0%
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1.0%
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Return on Assets
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3.0%
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5.0%
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Return on Investment
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8.0%
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10.0%
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Sales per Employee
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$161,749
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$135,068
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Net Profit per Employee
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$1,630
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$1,833
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Interest Coverage
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8.0
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10.0
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Financial industry data provided by Fintel -- offering leading benchmarking with a database of over 900 industries. Utilize financial analysis through profitability, liquidity, sustainable growth rate, business valuation, custom research, and other tools. Visit us on the web at www.fintel.us/firstresearch to find out how we can help you.
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Economic Statistics and Information
Annual Construction Put into Place
Census Bureau
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2001
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2002
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2003
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2004
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2005
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Commercial - Food
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-10.3%
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-2.2%
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0.6%
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-15.2%
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-8.4%
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Total Private Construction
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1.9%
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-0.4%
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6.6%
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14.4%
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11.8%
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Retail Annual Sales Growth
Census Bureau
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2001
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2002
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2003
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2004
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2005
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4451 Grocery stores
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3.9%
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0.4%
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2.3%
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4.1%
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4.4%
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Total US retail sales
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3.0%
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2.5%
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4.4%
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7.6%
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7.2%
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Change in Consumer Prices
Bureau of Labor Statistics
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2001
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2002
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2003
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2004
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2005
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Aug 06
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CUUR0000SAF11 Food at home
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3.3%
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1.3%
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2.2%
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3.8%
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1.9%
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1.9%
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CPI
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2.8%
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1.6%
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2.3%
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2.7%
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3.4%
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3.8%
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Valuation Multiples
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Grocery Stores and Supermarkets
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Acquisition multiples below are calculated using at least 20 private, middle-market (valued at less than $1 billion) industry transactions completed between 4/1991 and 3/2006. Last update: September 2006.
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Valuation Multiple
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Equity/Net Sales
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Equity/Net Income
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MVIC/Net Sales
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MVIC/EBIT
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Median Value
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0.3
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8.9
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0.3
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8.8
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Equity (Equity price) = Reported selling price
MVIC (Market Value of Invested Capital) = Equity price + Long-term liabilities assumed
EBIT (Earnings Before Interest & Taxes) = Net Income + Interest expense + Taxes
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SOURCE: Pratt's Statstm (Portland, OR: Business Valuation Resources, LLC) To purchase more detailed information, please either visit www.BVMarketData.com sm or call Business Valuation Resources at 888-287-8258.
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Industry Forecast
US personal consumption expenditures of food, a major driver for grocery stores and supermarkets, are forecast to grow at an annual compounded rate of 2.9 percent between 2006 and 2009.
Flat Consumer Spending Growth on Food
Source: IERF, Inc.
First Research forecasts are based on INFORUM forecasts that are licensed from the Interindustry Economic Research Fund, Inc. (IERF) in College Park, MD. INFORUM's "interindustry-macro" approach to modeling the economy captures the links between industries and the aggregate economy.
*First Research authorizes Gordon Brothers Asset Advisors to use the contents of First Research Industry profiles in Gordon Brothers Asset Advisors marketing materials. Industry Intelligence used with permission from First Research. To learn more visit www.firstresearch.com or call 866-788-7389. © 2005 First Research, Inc. All Rights Reserved.
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