...Family Dollar Stock Analysis and Recommendation Recommendation: HOLD Relevant Stock Information Ticker: FDO Company Beta: * 0.32 * (calculated from 3-year weekly historical stock prices) Closing Price as of April 12th 2012: $63.38 Dividend Yield: 1.30% P/E Ratio: $20.12 Current Market Capital: 7.52 Billion Summary of recommendation: Due to the current economic conditions and high possibility of economic change based on the current recession, Family Dollar’s public equity should mainly be considered from a short-term perspective. Applying this notion, we recommend that current FDO stockholders continue to hold their shares for the dividend yields and the potential increase in share value over the next few years. Investors seeking to purchase a dividend paying stock may also be interested in acquiring shares over the short-term horizon (1-2 years). However, those interested in safer longer-term investments may want to steer clear of FDO stock. The company’s capital expenditures and debt are increasing with the growth and development of new and current stores, and whether this expansion strategy will prove successful while the country’s economic conditions improve is highly dependent on the company’s ability to retain its customer base. In addition, while “quality” is subjective in nature, it is our opinion that consumers still attach a stigma to discount retailers and will likely choose to trade up to higher “quality” goods with improved economic conditions...
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...as Costco and BJ’s, the fastest-growing portion of the overall retail industry in the United States during the past decade has been in the dollar store segment. From 2000-2005 dollar stores had a compound annual growth rate (CAGR) of 10.2% which was nearly double the 5.6% CAGR in the retail industry as a whole. Sales from these discount stores were $24.7 billion in 2000 and were expected to more than double to $51.1 billion in 2009 (Exhibit 8). Two main drivers fueled this growth trend. The first was a cultural shift in consumers towards a bargain-based mentality. This was spurred by an increased presence of retailers with a low cost strategy including Wal-Mart, Sam’s Club, and Target over the past three decades. The second was the rising number of Americans falling below the poverty line as well as the number of people on fixed incomes due to the rapidly aging population resulting from the baby-boom after World War II. While the CAGR of dollar stores was forecasted to slow to 6.2% during 2005-2009, the actual decrease is likely to be smaller as more consumers try to stretch their dollars further through these retail outlets because of the global economic downturn of 2008. Industry Analysis Dollar General (DG) operates as an extreme-value retailer in the dollar store segment of the retail industry. Other categories that dollar stores fall under are single-price-point retailers, close-out retailers, and limited assortment grocery retailers. These retailers often operate...
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...Dollar General MBA 7000 Business Policy and Strategy March 14, 2012 Indiana Tech Introduction and Overview Dollar General’s CEO, Cal Turner Jr., said, “Our customer doesn’t buy until she absolutely has to – she’s that stretched. Our agenda has to be to do everything we possibly can to be responsive to her needs. This is why Dollar General’s executive vice president for operations and merchandising, described the company’s customers as: “Our customers are salt-of-the-earth people who are savvy about spending money because they have to be. They have to balance their checkbooks every day, at least mentally.” (Appendix 2) So to me that displays why Dollar General has flourished during these past years even during the economic challenges in United States, Dollar General understands the target customers they are looking to attract. Therefore, internally the company must meet government regulations of health care coverage to meet upcoming government standards and expansion of the company globally while being consistent and not straying off its aggressive business growth plan in the United States can increase the company’s share of the market not just locally but globally, while increasing the company sales and awareness thereby increasing its position even more so in the industry. Dollar General serves the mid to lower income households with annual incomes of less than $50,000. (Case) Dollar General has the largest appeal to large families, low income, fixed...
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...The concept of a dollar store is very simple: customers come in expecting to find inexpensive items. Dollarama Inc., Canada’s own ubiquitous brand, has capitalized on this price-point retail model and has performed exceptionally well over the last 22 years it has been in business. “We treat it really well, that $1 item. I do not think anybody else in the world takes it as seriously as we do,” explains CEO, Larry Rossy (Cowan, 2011). In comparison with most value-retail stores, Dollarama’s strategy is relatively simple: keep clean and brightly-lit stores with a consistent array of inventory (Cowan, 2011). However, its success is not only attributable to the convenience and ambiance offered by its stores, but also their “ability to capitalize on seasonal demand is [also] widely admired” (Cowan, 2011). Indeed, Dollarama has had the time to acquire the experience in optimizing its stores’ layout for effective leverage of seasonal products. All in all, most would say that Dollarama has done really well in its industry and climbed their way to being the dominant giant. Even so, retail analyst John Williams speculates that this dollar store has reached its mature phase of growth in the industry (Cowan, 2011). With even more new stores on the way, will Dollarama Inc.’s consistent growth be sustainable? Description The very first Dollarama was opened in 1992 in the city of Matane, Quebec. Founder and current CEO of Dollarama Inc., Lawrence (Larry) Rossy, at 70 years old, is a third generation...
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...Week 4 SWOT Analysis By: Jeannie Gilmore University of Phoenix Shane Wentz, Instructor | | Dollar General: What would you say if I could told everyone that the average person could get their groceries and other everyday household items at a price approximately 25% below the average supermarket shelf pricing in a conveniently located store, where you don’t have to walk long distances and where you won’t get lost in the isles? | 4/7/2013 4/7/2013 When reviewing all the business plans, I chose the Dollar General Store for this analysis. If a person reviewed Dollar General in this fashion, by understanding all the changes and success, it is easy to see why Dollar General is in the top category for retail merchandising. Strengths - In the highly competitive retailing arena, many players compete for the lead. One would think that retail giants like Wal-Mart, K-Mart or Target would dominate the market. However, in the past few years, it’s Dollar Stores like Family Dollar, Dollar General or Dollar Tree that have taken the advantage, with share gains significantly higher than the ones provided by other retailers. Dollar stores price their products approximately 25% below supermarkets and drugstores, yet offer equal or many times have better conveniences. Amongst Dollar Stores Chain, Dollar General is the big brother to them all. With over 10,000 stores in the United States, this leading company owes a large piece of its successes to an efficient management team...
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...create value and examine the measurement guidelines and the effectiveness of those guidelines to authenticate strategic effectiveness. Researchers have found a definite connection between profits and environmental scanning. Internal and External Environments Because a company has little to no control over external issues, it is important to monitor continuously for changes so that corrections can be made promptly. PEST is an acronym for political, economic, social, technological problems that may affect an external environment, and companies use this tool for external environmental scanning. The political factor looks at how legal issues and government regulations impact a company’s ability to gain profits and success. Walmart and Dollar General both will have to contend with tax guidelines, trade regulations, employment laws, environmental and social policies, and safety regulations. Both companies should consider federal and local power structures, and strategize for how a shift in power could impact their business. The economic factor scans outside economic issues that influence the business’s success. Topics to consider are inflation, interest rates, economic growth, unemployment policies, and economic stability, unanticipated shifts in resource costs, and commodity, and credit availability. The social issue can analyze the cultural and demographic aspects of the companies...
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...Management Policies and Practices Marc Hamilton 24 October 2012 GM SWOT Analysis As one of the world’s largest automobile manufacturers, General Motors (GM) was found in 1910. Today, GM has become an essential organization in the US that has a significant impact on the overall economy. GM markets its products under these well-known automobile brands: Buick, Chevrolet, GMC, FAW, Daewoo, Cadillac, Holden, Jiefang, Vauxhall, Opel, and Wuling. Followed by the US, Brazil, UK, Canada, Italy, and Germany, now China has become the largest market for automobile industry. SWOT analysis stands for the analysis on strengths, weaknesses, opportunities, and threats. Strengths: The first strength GM has is its brand value and image. Since 1910, General Motors has established a stable market share along with Chevrolet, Cadillac, and Buick and become a household name. Moreover, GM brand is rooted not only in the US but also throughout the whole world. Second, General Motors has a large global presence as well. GM truly has a big worldwide presence that it has manufacturing, assembly, and warehouse operation in 55 countries. Third, high quality products and services have always been the center for the company for achieving success. Finally, GM has a significantly high market share that it runs the business in 157 countries. Weaknesses: First, GM has complied more than 1000 dealerships for closure. At the end of 2008, General Motors had 715 dealerships in Canada, but a year later, GM has called...
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...Family Dollar Marketing Plan Shelley Hines King University Principles of Marketing BUSA 3240-0502 Executive Summary Family Dollar was founded by Leon Levine in 1959 (History). He wanted to create a discount store for what at the time was design for people looking for quality products at reasonable prices. Since the first store in Charlotte North Carolina, the chain has grown to over 8,000 locations across 45 states. He designed a floor plan that all the stores used as a main setup with an only a few modifications. Leon believed back then as any good manager will tell you “customers are boss, and you need to keep them happy” (History).This sentiment is still in place today. With the stores layout the same, customers can go to any location and easily find what they need. The philosophy that he started with the first store is just as strong today as it was then. Environmental Analysis External Environmental Forces One of the biggest forces Family Dollar must deal with is competition. They are in constant rivalry with competitors such as Dollar General, Dollar Tree, and Wal-Mart (Family Dollar Stores, Inc. Competition). Their strongest rival would be Dollar General with much of the same products and similar pricing. Therefore, it is becoming more and more important for Family Dollar to keep its competitive advantage with offering products the other competitor doesn’t or products at a lower price. Another factor that benefits Family Dollar is demography. Family Dollar...
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...GENERAL MILLS, INCORPORATED A Cost Accounting Analysis COMPANY BACKGROUND General Mills (GSI) is the sixth largest food company in the world. The company currently operates in more than 100 foreign countries and employs over 35,000 people. . GSI manufactures and markets branded consumer foods worldwide and supplies branded and unbranded food products to the foodservice and commercial baking industries. The company manufactures cereals, yogurt, ready-to-serve soup, dry dinners, frozen vegetables, refrigerated and frozen dough products, dessert and baking mixes, frozen pizza, flour, fruit and snacks; and organic products, including soup, granola bars, and cereals; and ice cream and frozen desserts, and high fiber snacks. Its best knows product brands are Betty Crocker, Green Giant, Pillsbury, Old El Paso, Cheerios and Haagen-Dazs. It markets its products through its direct sales, broker and distribution a to grocery stores, mass merchandisers, membership stores, natural food chains, drug, dollar and discount chains, commercial and noncommercial foodservice distributors and operators, restaurants, and convenience stores. The company was founded in 1928 and is based in Minneapolis, Minnesota. GSI’s businesses are organized into three operating segments: U.S. Retail, International, and Bakeries and Foodservice. The U.S. Retail segment includes sales to grocery stores, mass merchandising, and membership stores such as BJ’s, Sam’s and Costco, natural food chains, drug,...
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...MARKETING PLAN | SPREE WATCH MARKETING PLAN SUMMARY Based on an evaluation of the watch market and our strengths, General will introduce the Spree watch. SITUATION ANALYSIS Half the buyers of branded fashion watches are between 18 and 34 years of age. This group, which purchases more watches per capita than those older, is our primary market segment. Watch purchases are more likely by consumers in the northeast and Midwest. Many purchases are expected to be impulse, requiring strong point-of-purchase support. Seventy percent of the market is concentrated with strong competition from Swatch, Fossil, Guess?, and Anne Kline. We have extensive experience in the manufacture of innovative, high quality, precision plastics and timing devices permitting us to offer the consumer value in a branded fashion watch. Additionally, we have experience distributing products into 75 percent of the outlets for branded fashion watches. OBJECTIVES The combination of a unique, cost-effective design allows us to establish a three percent market share in the first year. The Spree watch project will break-even in 1998. MARKETING STRATEGIES General will introduce a new product, the innovative Spree watch, using penetration pricing, extensive advertising, and expanded distribution in order to increase our revenues and growth rate. ACTION PLAN The Spree watch has strong product benefits compared to current market offerings. To achieve our objectives we will offer our unique watch in a variety of...
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...Company Narrative - Industry Analysis Nicole Gabor Abstract The Kellogg Company and General Mills are the world’s leaders in manufacturing cereals and snacks. The financial analysis of both companies shows similarities in market trends and issues both companies are facing. The following analysis will shed light the financial standing with direct relation to the DuPont Identity and ratios lending to success and industry trends. Kellogg Company Narrative - Industry Analysis An industry analysis was completed on the well-known company, Kellogg (NYSE:K). The Kellogg Company is one of the world’s largest producers of cereals, snacks and frozen foods. The company product portfolio includes favorites such as Frosted Flakes, Rice Krispies, Eggo waffles and Nutri-Grain cereal bars. Kellogg was founded in 1906 with headquarters located in Battle Creek, Michigan. The company has manufacturing facilities in over thirty-five countries and markets products in more than 180 countries globally. The company is divided into seven business segments which consist of North America, Europe, Latin America, Asia Pacific, U.S. Morning Foods and Kashi, U.S. Snacks, and U.S. Specialty. Kellogg’s biggest competitor is General Mills (NYSE:GIS). General Mills was founded in 1866, and is one of the world’s leading manufacturers of consumer food products. The company has over 100 brands, including Betty Crocker, Cheerios, Yoplait, Gold Medal, and many more. General Mills manufacturers its products...
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...Overview In 1966-1967 General Foods Corporation was considering introducing a new product called the Super product. This product was “a new instant dessert based on flavored, water soluble, agglomerated powder” to both the United States and foreign markets. The capital investment was projected to be $200,000, and it would leverage the existing facilities used by the Jell-O manufacturing unit that had an available under-utilized capacity of its Jell-O agglomerate. A Nielsen market survey was done that showed a powered desert which would contribute to a significant growth market. The results projected that the product would capture 10% of the market share; 8% percent would be from new growth while 2% would come from the cannibalization of the current Jell-O-sales. The evaluation process to determine the investment opportunity for the Super Project was based on the incremental cash flow analysis. Crosby Samberg, a manager and financial analyst for General Food Corporation felt that this model was flawed and that a new more “accurate” model had to be used to examine the returns on the Super Project. The first assessment model was using the General Food acceptable practice of incremental analysis. The incremental anlaysis determined that Super Project have an attractive return of 63%. The second mythology was to add the facilities' costs, which examine the opportunity costs of leveraging the available pre-existing Jell-O equipment. This model determined that the Super Project would...
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...Dollar Tree Analysis Name: Date: Analyze the business-level strategies The sluggish economy has created a perfect storm in favor of the retail business. Dollar Tree, Wal-Mart, and Dollar General have generated significant profits as a result of the sluggish economy. These firms have embraced the financial opportunity amid consumer pessimism. This evaluation will disgust the business level-strategy practiced by Dollar Tree. We will discuss its strength, weakness, opportunity, and threats. The organization strength has made it possible to respond to realistic opportunities. The firm’s decision makers thrive to increase profit. Consequently, their proven ingenuity has shaped the strategic business model. In short, Dollar Tree has the ability to sustain long-term growth, and sufficient cash to invest in new ventures. As a result, company’s estimates have significantly increased. Organizations can maintain a competitive advantage only if they can provide their customers competitive products at low prices (Hitt, Ireland, & Hoskisson, 2013). Dollar Tree offers consumers this service, more value for 1$, no other competitor has been able to match this strategy. Dollar Tree operates as a discount variety store selling products at a uniform price of $1 or less. Dollar Tree operates 4,842 stores nationwide and 5 Canadian Providence (Dollar Tree, 2013). Moreover...
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...Table of Contents “Foreign Market Entry Plan - getting started 4 1. EXECUTIVE SUMMARY 5 2. INTRODUCTION 5 3. CULTURAL ANALYSIS OF ITALY 5 3.1 Geographical Setting 5 3.1.1Location 5 3.1.2.Climate 5 3.2 Description of Political System 5 3.3 Population and Demographics 5 3.3.1. Total Population Size 5 3.3.2. Distribution of Population (by) 6 4. Economic Statistics and Descriptions 6 4.1. Gross National Product (GNP) 6 4.2. Distribution of income (by) 6 4.3. Inflation Rate 6 4.4. Government Social Programs 6 4.5. Labor Force 6 4.6. Principal Industries 7 4.7. Foreign Investment 7 4.8. Infrastructure 7 4.9. Currency strength and stability and current rate of exchange 7 4.10 General Trade Restrictions and discussion of trade environment 7 4.12. Description of Religion and It’s Impact on Daily Life 7 5. Description of Daily Life and Lifestyles 8 5.1. Male/Female Roles in Society 8 5.2. Recreation/sports/and leisure activities 8 5.3. Impact of Technology (Available technologies and skill level of the general population and labor force) 8 8. COMPETITIVE ANALYSIS 8 8.1. Compare on market(Strength/weaknesses)/contrast your product with competitors’ products 8 8.2. Competitive brands available in the market 8 9. Estimated industry-wide sales (or volume) for year—all brands 8 10. Market Conditions Faced 9 10.1. Consumer buying habits 9 Distribution of similar or competitive products 9 10.2. Advertising and Promotion 9 10.3. Media...
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...Historical Income Statement from the past 3 years: · Decrease in net sales from year 12. Sales decreased by $434,700 from year 12 to year 13 and only rebounded by $80,500 between year 13 and year 14. The lower level of sales results in a lower dollar amount for gross profit, which decreases the amount left to cover selling, general and administrative expenses and leads to lower operating income. The lower operating income leaves a smaller amount to service debt in the form of interest payments. · Increase in total general and administrative cost when sales are declining – administrative salaries, executive compensation, utilities and other general and administrative expenses increased as net sales were declining. · Decrease in operating income will impact ability to service debt. · Decrease in Net Income will impact earnings per share. Historical Balance Sheet for past 3 years: · Decrease in short-term investments without increase in cash. Short term investments sold to purchase furniture fixtures and equipment. · Decrease in net working capital. · Cash used to increase furniture, fixtures and equipment, not revenue producing items. Increase in furniture, fixtures and equipment corresponds to increase in general and administrative expenses. · Decrease in Net income results in decrease in earnings per share Comparative Pro Forma Income Statements: · Sales are projected to climb by approximately 75% over the 5 year period of the pro forma statements...
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