Morrisons supermarket - financial report - page 1
Keywords: Morrisons,Finanial report,supermarket,performance of morrisons
By maya on 02/05/2008
Level: Master's degree (MA, MBA, MSc, MEng, MRes, MPhil etc)
Page Number: 1 of 14 pages: 1 2 3 4 5 6 7 8 9 10 11 12 13 14
Executive Summary
As the nature of pension fund, which is very important for the investors’ lives, pension-fund managers should act ethically and do not exposure pension funds to a high-risk industry, such as, oil industry. The supermarket industry, as its nature, is relatively low risk for investment. As such, this report is interest to choose the WM Morrisons Supermarket Plc as an investment target. Firstly, the report will give a description of the supermarket industry in terms of industry background and competitor analysis. Then the report will give details of analysis of Morrisons in terms of its historical performance that based on the past financial performance and position of the company in the industry. Thirdly, the core value drivers of Morrisons that are often regarded as critical issues to revenue and cost functions of a firm will be also analyzed. Finally, the report will project future performance of Morrisons and based on all above analyses and make a buy/ don’t buy recommendations based on two stock valuation models.
1. INDUSTRY ANALYSIS
1.1 Market Background
The supermarket and superstore market remains strong in the UK, with the value of retail food sales experiencing continued growth. However, there is inconsistency in the percentage rate of year-on-year growth. Competition in the market is extremely intense and customers are showing less loyalty to any particular chain. This has resulted in a return to supermarkets' traditional means of competition — price.
While the food retail sector is one of the last to be affected by economic slowdown, it is evident that price reduction is one of the major strategies employed by the larger supermarket chains. Moreover, the continued expansion of supermarket chains means that many customers are now able to choose from a number of different supermarket chains in their immediate locality. This has led to some more localised price competition, in addition to those reductions and special offers that apply throughout a given chain.
However, price is not the only focus of competition, with the major national chains competing for the lucrative higher end of the consumer market. Waitrose Ltd and Marks and Spencer PLC have traditionally catered for the upper end of the mass consumer market, but are now facing renewed competition from J Sainsbury PLC and Tesco PLC. These companies have developed their own luxury convenience foods to attract shoppers in this market.
The market continues growing. This partly reflects an increase in efficiency among the major supermarket chains,
Last 5 comments…
There have been no comments posted for this article, but you need to register if you want to be the first!