Retail Store Industry Study Part One

Assignment: Perform online research into the retail industry; Bring pertinent information to share; Review the Value Lines and Data Files on the Retail Store stocks and bring an SSG on the 1 or 2 you think we should study.

First, what did everybody learn?

Industry Specific Characteristics In the Retail Store Industry

1. Comps Comps are Comparative Same Store Sales –Stores open more than a year –A standard measure of revenue growth –A first sign of problems with merchandise mix, good or bad location, changing trends of buyers, new competition, good or bad weather, etc. Where do we find them? –Company press releases –Association websites like

Finding Comps – press releases

Finding Comps – Association websites

2. New Store Openings A standard measure of future growth –Important to know what they “consider” is the saturation point for their venue, so we know how to estimate growth going forward. Where do we find store openings? –Value Line (10-year statistical array) –Company press releases

Finding New Store Openings Value Line Company Press Release

3. Inventory Is Inventory OK? Is Inventory OK? –2 nd sign of trouble in retail –Right behind reduction in same store sales –Should be growing at same rate as sales Where and how do we calculate Inventory? –It’s on the balance sheet –We should calculate last 5 quarters, and year over year for 5 years when doing initial study –Multex Investor is the easy way to get the numbers

Finding Inventory

How to Calculate a % Increase Here’s the calculation! “This year minus last year, divided by last year” – div. By = 8% – div. By = 4% – div. By = (12%) – div. By = 16% Was the substantial increase, then decrease, in inventory due to the holidays??

Compare Inventory to Sales Here are the calculations for sales: – div. By = (1%) – div. By = (5%) – div. By = 25% – div. By = 4% Now, let’s compare percentages only! Qu. End8/025/022/0211/01 Sales(1%)(5%) 25% 4% Inventory 8% 4%(12%)16%

What else should we Compare? Historical Sales Historical Pre-tax Profit Historical EPS Current Debt/Capital Signature P/Es & Relative Value Upside Potential, and 1 st three items on a quarterly basis? All found on the SSG & PERT!

What else should we Compare? Long-term projected growth rates? Gross Margin? (Multex) Net Margin? (Multex) Return on Assets? (Multex) Financial Strength? (Value LIne) Earnings Predictability? (Value Line) Buying back Shares? (Value Line) Important! – But Optional

The Value Line Companies in our Study Quality at a Glance… …Take your Pick!

BJ’s Wholesale Big Lots, Inc. Costco Wholesale Dillard’s Dept. Store Dollar General Federated Dept. Store

Family Dollar Stores Fred’s, Inc.J. C. Penney Nordstrom’s Kmart Kohl’s

May Dept. StoresNeiman-Marcus Sears Roebuck Shopko, Inc. Saks 5 th Ave. Target

Wal-Mart

Stocks that meet our Quality: BJ’s Wholesale Costco Wholesale

Stocks that Meet our Quality: Dollar General Family Dollar Stores

Stocks that Meet our Quality: Fred’s, Inc. Kohl’s

Stocks that Meet our Quality: TargetWal-Mart

Time to Choose! Here are our options: 1. Each person pick a stock (Draw them out of a hat?!) (Draw them out of a hat?!) 2. Pick teams of two – 4 stocks to study (Pair up and pick your choice!) (Pair up and pick your choice!)

November Assignment Prepare a report and SSG on your company –Follow format on handout so everyone is bringing the same information –Keep it short and simple! –Teams can split up the work and one person can format the report Post it on our website by November 5 th –We need to wrap this up before year’s end! –This gives everyone 1 week to review all reports –Post to Files|Retail Store Industry Study|November Assignment folder

Click on the Retail Store Industry Study Follow the November Assignment folder line all the way to the right Click on the “Upload” link

Click on Browse Find the report on your computer

After you double-click on your report, it will automatically appear in the “File” box. After you click OK, it will use your original file name, so make sure you name your file “XYZ Company Report.” Now do the same with the SSG file. Leave the file name XYZ.itk.

And here they are…

Questions?! Be prepared next month!